SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

For the quarterly period ended September 30, 201728, 2019

OR

For the transition period from ____________________________ to ____________________________

Commission file number: 1-10245

RCM TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

2500 McClellan Avenue, Suite 350, Pennsauken, New Jersey  08109-4613

(Address of Principal Executive Offices)                                        (Zip Code)

(Registrant'sRegistrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES [X]     NO [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  YES [X]     NO [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company.  (See the definitions of "large“large accelerated filer," "accelerated” “accelerated filer," "smaller” “smaller reporting company"company” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act).  (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES [  ]     NO [X]

Indicate the number of shares outstanding of the Registrant'sRegistrant’s class of common stock, as of the latest practicable date.

Common Stock, $0.05 par value, 12,011,69912,955,847 shares outstanding as of November 1, 2017.7, 2019.

The accompanying consolidated interim financial statements of RCM Technologies, Inc. and subsidiaries ("RCM"(“RCM” or the "Company"“Company”) are unaudited. The year-end consolidated balance sheet was derived from audited statements but does not include all disclosures required by accounting principles generally accepted in the United States. These statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission pertaining to reports on Form 10-Q and should be read in conjunction with the Company'sCompany’s consolidated financial statements and the notes thereto for the year ended December 31, 201629, 2018 included in the Company'sCompany’s Annual Report Form 10-K for such period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations.

The consolidated financial statements for the unaudited interim periods presented include all adjustments (consisting only of normal, recurring adjustments) necessary for a fair presentation of financial position, results of operations and cash flows for such interim periods.

Results for the thirteen and thirty-nine week periods ended September 30, 201728, 2019 are not necessarily indicative of results that may be expected for the full year.

The Company follows a 52/53 week fiscal reporting calendar ending on the Saturday closest to December 31.  The fiscal year ended December 31, 201629, 2018 was a 52-week reporting year.  The third fiscal quarters of 20172019 and 20162018 ended on the following dates, respectively:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenuesrevenue and expenses and disclosure of contingent assets and liabilities.  Actual results could differ from those estimates.

The Company uses estimates to calculate an allowance for doubtful accounts on its accounts receivables, adequacy of reserves, goodwill impairment, if any, equity compensation, the tax rate applied and the valuation of certain assets and liability accounts.  These estimates can be significant to the operating results and financial position of the Company.

The Company has risk participation arrangements with respect to workers compensation and health care insurance.  The amounts included in the Company'sCompany’s costs related to this risk participation are estimated and can vary based on changes in assumptions, the Company'sCompany’s claims experience or the providers included in the associated insurance programs.

The Company can be affected by a variety of factors including uncertainty relating to the performance of the general economy, competition, demand for the Company'sCompany’s services, adverse litigation and claims and the hiring, training and retention of key employees.

The Company's carrying valueCompany’s IT and Healthcare segments predominantly recognize revenue through time and material work while its Engineering segment recognizes revenue through both time and material and fixed fee work. The Company’s time and material contracts are typically based on the number of financial instruments, consisting primarilyhours worked at contractually agreed upon rates, therefore revenue associated with these time and materials contracts are recognized based on hours worked at contracted rates. 

From time to time and predominantly in our Engineering segment, the Company will enter into contracts requiring the completion of accounts receivable, transit accounts receivable,specific deliverables.  The Company has master services agreements with many of its customers that broadly define terms and conditions. Actual services performed under fixed fee arrangements are typically delivered under purchase orders that more specifically define terms and conditions related to that fixed fee project. While these master services agreements can often span several years, the Company’s fixed fee purchase orders are typically performed over six to nine-month periods.  In instances where project services are provided on a fixed-price basis, revenue is recorded in accordance with the terms of each contract.  In certain instances, revenue is invoiced at the time certain milestones are reached, as defined in the contract.  Revenue under these arrangements are recognized as the costs on these contracts are incurred.  On an infrequent basis, amounts paid in excess of revenue earned and recognized are recorded as deferred revenue, included in accounts payable and accrued expenses on the accompanying balance sheets.  In other instances, revenue is billed and transitrecorded based upon contractual rates per hour.  Additionally, some contracts contain “Performance Fees” (bonuses) for completing a contract under budget.  Performance Fees, if any, are recorded when earned.  Some contracts also limit revenue and billings to specified maximum amounts.  Provisions for contract losses, if any, are made in the period such losses are determined.  For contracts where there is a specific deliverable, the work is not complete and the revenue is not recognized, the costs incurred are deferred as a prepaid asset.  The associated costs are expensed when the related revenue is recognized.

Deferred revenue was $288 and $150 at September 28, 2019 and December 29, 2018, respectively and is included in accounts payable and borrowings under lineaccrued expenses in the accompanying consolidated balance sheet at those dates.  Revenue is recognized when the service has been performed.  Deferred revenue may be recognized over a period exceeding one year from the time it was recorded on the balance sheet.  For the thirty-nine week period ended September 28, 2019, the Company recognized revenue of credit approximates fair value due to their liquidity or their short-term nature.  The Company does not have derivative products$150 that was included in place to manage risks related to foreign currency fluctuations for its foreign operations or for interest rate changes.deferred revenue at the beginning of the reporting period.

The Company'sCompany’s accounts receivable are comprised as follows:

Unbilled receivables primarily represent revenuesrevenue earned whereby those services are ready to be billed as of the balance sheet ending date.  Work-in-progress primarily represents revenuesrevenue earned under contracts which the Company contractually invoices at future dates.

From time to time, the Company'sCompany’s Engineering segment enters into agreements to provide, among other things, construction management and engineering services.  Pursuant to these agreements, the Company a) may engage subcontractors to provide construction or other services; b) typically earns a fixed percentage of the total project value; and c) assumes no ownership or risks of inventory.  Under the terms of the agreements, the Company is typically not required to pay the subcontractor until after the corresponding payment from the Company'sCompany’s end-client is received. Upon invoicing the end-client on behalf of the subcontractor or staffing agency the Company records this amount simultaneously as both a "transit“transit account receivable"receivable” and "transit“transit account payable"payable” as the amount when paid to the Company is due to and generally paid to the subcontractor within a few days. The Company typically does not pay a given transit account payable until the related transit account receivable is collected. The Company'sCompany is typically obligated to pay the subcontractor or staffing agency whether or not the client pays the Company.  The Company’s transit accounts payable generally exceeds the Company'sCompany��s transit accounts receivable but absolute amounts and spreads fluctuate significantly from quarter to quarter in the normal course of business. The transit accounts receivable was $1.7$3.7 million and related transit accounts payable was $3.0$4.5 million, for a net liabilitypayable of $1.3$0.8 million, as of September 30, 2017.28, 2019.  The transit accounts receivable was $4.3$2.6 million and related transit accounts payable was $6.8$2.5 million, for a net liabilityreceivable of $2.5$0.1 million, as of December 31, 2016.29, 2018.

Property and equipment are stated at cost and are depreciated on the straight-line method at rates calculated to provide for retirement of assets at the end of their estimated useful lives.  The annual rates are 20% for computer hardware and software as well as furniture and office equipment.  Leasehold improvements are amortized over the shorter of the estimated life of the asset or the lease term.

The Company has acquired numerous companies throughout its history and those acquisitions have generally included significant future contingent consideration.  The Company gives no assurance that it will make acquisitions in the future and if they do make acquisitions gives no assurance that such acquisitions will be successful.

As of September 30, 2017,28, 2019, the Company had fivetwo active acquisition agreements whereby additional contingent consideration may be earned by the former shareholders: 1) effective JulyOctober 1, 2012 the Company acquired certain assets of BGA, LLC ("BGA"); 2) effective August 1, 20142017, the Company acquired all of the stock of Point Comm, Inc. ("PCI"PSR Engineering Solutions d.o.o. Beograd (Voždovac) (“PSR”); 3) and 2) effective July 5, 2015,September 30, 2018, the Company acquired certain assets of Substation Design Services,Thermal Kinetics Engineering, PLLC and Thermal Kinetics Systems, LLC ("SDS"); 4) effective December 31, 2016, the Company acquired certain assets of Allied Health Professionals, LLC ("AHP") and 5) effective April 16, 2017 the Company acquired certain assets of R.A.F. Services, Inc. ("RAF"(together, “TKE”). The Company estimates future contingent payments at September 30, 201728, 2019 as follows:

Estimates of future contingent payments are subject to significant judgment and actual payments may materially differ from estimates.  Potential futurefuture contingent payments to be made to all active acquisitions after September 28, 2019 are capped at a cumulative maximum of $2.9$6.3 million.  The Company estimates future contingent consideration in payments based on forecasted performance and recorded at the net presentfair value of those expected payments as of September 30, 2017.28, 2019.  During the thirty-nine week period ended September 28, 2019, the Company measured the intangibles acquired at fair value on a non-recurring basis.  Contingent consideration related to acquisitions are recorded at fair value (level 3) with changes in fair value recorded in other (expense) income, net.

The Company paid $0.8 million in contingent consideration of $0.6 million and $0.3 million during both of the thirty-nine week periods ended September 30, 201728, 2019 and October 1, 2016.September 29, 2018, respectively.

Effective December 31, 2016,September 30, 2018, the Company acquired the business operations of Allied Health Professionals,Thermal Kinetics Engineering, PLLC, a New York professional limited liability company and Thermal Kinetics Systems, LLC, ("AHP"a New York limited liability company (together, “TKE”). AHP was a Chicago area healthcare staffingTKE is an established Buffalo-based engineering company providing physical therapists, occupational therapistsfull service process equipment supply, engineering, development and speech language pathologists to hospitals, rehabilitation centers, schoolsdesign services for construction and outpatient programs. The Company expectsindustrial customers.  TKE provides engineering services on construction and industrial processes.  TKE engineers and builds optimal thermal integrations and unique separations approaches for industrial processes and equipment, with clients primarily in the AHP acquisition tochemical, oil and gas, renewable fuels, pharmaceutical, and industrial manufacturing industries. TKE will complement its Chicago area operations which formerly provided primarily nurses to the Chicago Public School system. AHP will add new clients and expand the Company's serviceCompany’s services offerings, inproviding a stronger depth of experienced engineering resources and capabilities.  The Company estimated the Chicago area.  The purchase price for AHP was $695, all of which was allocated to goodwill, payable as follows: 1) cash of $275 paid in January 2017; 2) an unsecured note payable of $280contingent consideration to be paid to TKE as of the acquisition date and indicated such estimate resulted in quarterly installments through October 2018;a preliminary purchase price and 3) maximumallocation. Those estimates were highly dependent on uncertain estimates. The Company has finalized the purchase price by reducing its original estimate of contingent consideration of $140 tied to certain gross profit targets and, if earned, payable in 2018.

The shareholders of TKE are eligible to receive post-closing contingent consideration upon the business exceeding certain base levels of operating income, potentially earned over three years.  The amount recorded for the contingent consideration represents the acquisition date fair value of expected consideration to be paid based on TKE’s forecasted operating income during the three year period. Expected consideration was valued based on different possible scenarios for projected operating income.  Each case was assigned a probability which was used to calculate an estimate of the forecasted future payments.  Then a discount rate was applied to these forecasted future payments to determine the acquisition date fair value to be recorded.  At the time of the acquisition, the book and tax basis of assets and liabilities acquired are the same. The acquisition has been accounted for under the purchase method of accounting. The total purchase price has been allocated as follows:

The results of operations of TKE have been included in the consolidated statement of operations as of the effective date of acquisition. The following revenue and operating loss of TKE are included in the Company’s consolidated results of operations:

The changes in the carrying amount of goodwill occurred duringfor the thirty-nine week period ended September 30, 2017:28, 2019 are as follows:

The Company evaluates long-lived assets and intangible assets with definite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  When the Company determines that it is probable that undiscounted future cash flows will not be sufficient to recover an asset'sasset’s carrying amount, the asset is written down to its fair value.  Assets to be disposed of by sale, if any, are reported at the lower of the carrying amount or fair value less cost to sell.  The Company'sCompany’s intangible assets consist of customer relationships and non-compete agreements.  During all periods presented, the Company determined that no impairment of intangible assets exists.

The following table reflectsAll of the activity for netCompany’s intangible assets excludingare associated with the Engineering segment.  Intangible assets other than goodwill which is substantially attributable to the Company's Engineering segment,are amortized over their useful lives.  Intangible assets are carried at cost, less accumulated amortization.

The Company and its subsidiaries are party to a loan agreementamended and restated its Revolving Credit Facility with Citizens Bank of Pennsylvania whichon October 18, 2019.  As amended and restated, the Revolving Credit Facility provides for a $35$45.0 million revolving credit facility, and includes ahas no sub-limit of $5 million for letters of credit, (the "Revolving Credit Facility") and expires December 11, 2019.  The Revolving Credit Facility has been amended several times, most recently pursuant to the Seventh Amendment entered into on MarchAugust 8, 2017 when the Company was granted a waiver that expressly excludes $1.3 million of certain legal settlement and office closure expenses in the calculation of the Company's loan covenants. 2023.

Borrowings under the Revolving Credit Facility bear interest at one of two alternative rates, as selected by the Company at each incremental borrowing.  These alternatives are: (i) LIBOR (London Interbank Offered Rate), plus applicable margin, typically borrowed in fixed 30-day increments or (ii) the agent bank'sbank’s prime rate generally borrowed over shorter durations.  The Company also pays unused line fees based on the amount of the Revolving Credit Facility that is not drawn.  Unused line fees are recorded as interest expense.  The effective weighted average interest rate, including unused line fees, for the thirty-nine week periodperiods ended September 30, 2017 was 2.6%.

All borrowings under the Revolving Credit Facility are collateralized by all of the assets of the Company and its subsidiaries and a pledge of the stock of its subsidiaries.  The Revolving Credit Facility also contains various financial and non-financial covenants, such as a covenant that restricts on the Company'sCompany’s ability to borrow in order to pay dividends.  As of September 30, 2017,28, 2019, the Company was in compliance with all covenants contained in itsthe Revolving Credit Facility.

Borrowings under the line of credit as of September 30, 201728, 2019 and December 31, 201629, 2018 were $9.5$31.7 million and $14.3$27.5 million, respectively.  At September 30, 201728, 2019 and December 31, 201629, 2018 there were letters of credit outstanding for $0.8$1.6 million.  At September 30, 2017,28, 2019, the Company had availability for additional borrowings under the Revolving Credit Facility of $24.7$11.7 million.

The Company uses the treasury stock method to calculate the weighted-average shares used for diluted earnings per share.  The number of common shares used to calculate basic and diluted earnings per share for the thirteen and thirty-nine week periods ended September 30, 201728, 2019 and October 1, 2016September 29, 2018 was determined as follows:

ThereFor all periods presented, there were 15,000 and 42,500 absoluteno anti-dilutive shares not included in the calculation of common stock equivalents for the thirty-nine week periods ended September 30, 2017 and October 1, 2016, respectively.  Theseas there were determined to be anti-dilutive because the exercise prices of these shares for the periods were higher than the average market price of the Company's commonno stock for the same periods.options outstanding.

At September 30, 2017,28, 2019, the Company had threetwo share-based employee compensation plans.  The Company measures the fair value of share-based awards, if and when granted, based on the Black-Scholes method and using the closing market price of the Company'sCompany’s common stock on the date of grant.  Awards vest over periods ranging from one to three years and expire within 10 years of issuance.  Share-based compensation expense related to time-based awards is amortized in accordance with applicable vesting periods using the straight-line method.  The Company vestsexpenses performance-based awards only when the performance metrics are likely to be achieved and the associated awards are therefore likely to vest.  Performance-based share awards that are likely to vest are also expensed on a straight-line basis over the vesting period but may vest on a retroactive basis or be reversed, depending on when it is determined that they are likely to vest, or in the case of a reversal when they are later determined to be unlikely to vest.

As of September 30, 2017,28, 2019, the Company had approximately $0.3$0.1 million of total unrecognized compensation cost related to all time-based non-vested share-based awards granted under the Company's various share-based plans, which theand performance-based restricted stock units outstanding and deemed as likely to vest. The Company expects to recognize this expense over approximately a two-year period.two years.  These amounts do not include a) performance-based restricted stock units deemed unlikely to vest, b) the cost of any additional share-based awards that may be granted in future periods or c) the impact of any potential changes in the Company'sCompany’s forfeiture rate.

The 2014 Plan, approved by the Company's stockholdersCompany’s shareholders in December 2014, provides for the issuance of up to 625,000 shares of the Company'sCompany’s common stock to officers, non-employee directors, employees of the Company and its subsidiaries or consultants and advisors utilized by the Company.  In fiscal 2016, the Company amended and restated the 2014 Plan with shareholder approval to increase the aggregate number of shares of stock reserved for issuance under the Plan by an additional 500,000 shares so that the total number of shares of stock reserved for issuance under the Plan is 1,125,000 shares.  The expiration date of the Plan is December 1, 2026.  The Compensation Committee of the Board of Directors determines the vesting period at the time of grant.

As of September 30, 2017,28, 2019, under the 2014 Plan, 612,734120,372 time-based and 320,000 performance-based restricted stockshare units were outstanding including 400,000 performance-based restricted stock units the Company currently deems unlikely to vest, and 379,266267,551 shares were available for awards thereunder.

The Company implemented the 2001 Employee Stock Purchase Plan (the "Purchase Plan"“Purchase Plan”) with shareholder approval, effective January 1, 2001.  Under the Purchase Plan, employees meeting certain specific employment qualifications are eligible to participate and can purchase shares of common stock semi-annually through payroll deductions at the lower of 85% of the fair market value of the stock at the commencement or end of the offering period.  The purchase plan permits eligible employees to purchase shares of common stock through payroll deductions for up to 10% of qualified compensation.

In fiscal 2015, the Company amended the Purchase Plan with shareholder approval to increase the aggregate number of shares of stock reserved for issuance or transfer under the Plan by an additional 300,000 shares so that the total number of shares of stock reserved for issuance or transfer under the Plan shall be 1,100,000 shares and to extend the expiration date of the Plan to December 31, 2025.  In fiscal 2018, the Company amended the Purchase Plan with shareholder approval to increase the aggregate number of shares of stock reserved for issuance or transfer under the Plan by an additional 300,000 shares so that the total number of shares of stock reserved for issuance or transfer under the Plan shall be 1,400,000 shares.

The Company has two offering periods in the Purchase Plan coinciding with the Company'sCompany’s first two fiscal quarters and the last two fiscal quarters.  Actual shares are issued on the first business day of the subsequent offering period for the prior offering period payroll deductions.  The number of shares issued at the beginning of the current period (on July 3, 2017)1, 2019) was 47,183.59,075.  As of September 30, 2017,28, 2019, there were 177,280267,877 shares available for issuance under the Purchase Plan.

From time-to-time the Company issues time-based restricted stock units.  These time-based restricted stock units typically include dividend accrual equivalents, which means that any dividends paid by the Company during the vesting period become due and payable after the vesting period assuming the grantee'sgrantee’s restricted stock unit fully vests.  Dividends for these grants are accrued on the dividend payment dates and included in accounts payable and accrued expenses on the accompanying consolidated balance sheet.  As of September 28, 2019, there was $40 in accrued dividends.  Dividends for time-based restricted stock units that ultimately do not vest are forfeited.

To date, the Company has only issued time-based restricted stock units only under its 2007 Omnibus Equity Compensation Plan and the 2014 Plan.  The 2007 Plan has expired and 2014 Plans.there are no time-based restricted stock units outstanding thereunder.  The following summarizes the activity in the time-based restricted stock units under the 2007 and 2014 PlansPlan during the thirty-nine week period ended September 30, 2017:28, 2019:

Based on the closing price of the Company'sCompany’s common stock of $5.72$3.04 per share on September 29, 201727, 2019 (the last trading day prior to September 30, 2017)28, 2019), the intrinsic value of the time-based non-vested restricted stock units at September 30, 201728, 2019 was approximately $1.2 million.$366.  As of September 30, 2017,28, 2019, there was approximately $0.3 million$138 of total unrecognized compensation cost related to time-based restricted stock units, which is expected to be recognized over the vesting period of the restricted stock units.

From time-to-time the Company issues performance-based restricted stock units to its executives.  Performance-based restricted stock units are typically vested based on certain multi-year performance metrics as determined by the Board of Directors Compensation Committee. These performance-based restricted stock units typically include dividend accrual equivalents, which means that any dividends paid by the Company during the vesting period become due and payable after the vesting period on any stock units that actually vest, if any.  Dividends for these grants are accrued on the dividend payment dates and included in accounts payable and accrued expenses on the accompanying consolidated balance sheet.  As of September 28, 2019, there were no accrued dividends.  Dividends for performance-based restricted stock units that ultimately do not vest are forfeited.  

To date, the Company has only issued performance-based restricted stock units only under the 2014 Plan.  The following summarizes the activity in the performance-based restricted stock units during 2017:the thirty-nine week period ended September 28, 2019:

As of September 30, 2017,28, 2019, the Company currently considers the metrics related to 400,000 of the total outstanding 320,000 performance-based restricted stock units as unlikely to be achieved, thus no performance condition is probable of achievement and no compensation cost has been recognized on the performance-based restricted stock units.achieved. The Company will reassess at each reporting date whether achievement of any performance condition is probable and would begin recognizing additional compensation cost if and when achievement of the performance condition becomes probable.  The Company will then recognize the appropriate expense cumulatively in the year performance becomes probable and recognize the remaining compensation cost over the remaining requisite service period. If at a later measurement date the Company determines that performance-based restricted stock units deemed as likely to vest are deemed as unlikely to vest, the expense recognized will be reversed.  As of September 28, 2019, there was approximately $1.5 million of total unrecognized compensation cost related to performance-based restricted stock units deemed likely to vest. 

On October 28, 2013, the Board of Directors authorized a repurchase program to purchase up to $5.0 million of outstanding shares of common stock at the prevailing market prices, from time to time over the subsequent 12-month period.  On September 30, 2014, the Board extended this repurchase program through October 31, 2015.  On September 11, 2015, the Board extended this repurchase program through December 31, 2016.  On August 9, 2016, the Board authorized an additional $5.0 million to the repurchase program and extended this repurchase program through December 31, 2017.  DuringFor both the thirty-nine week periods ended September 30, 201728, 2019 and October 1, 2016,September 29, 2018, the Company purchased 59,312 shares at an average price of $6.16 per share and 357,250 shares at an average price of $5.54, respectively.  As of September 30, 2017, the Company has $2.5 million available for future treasury stock purchases.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). The new standard amends guidance on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2018,2019, including interim periods within those fiscal years.  The Company is currently evaluating this guidancedoes not expect the adoption of ASU 2016-13 to determine thehave a material impact it may have on its consolidated financial statements.

The Company follows "Disclosures“Disclosures about Segments of an Enterprise and Related Information,"” which establishes standards for companies to report information about operating segments, geographic areas and major customers.  The accounting policies of each reportable segment are the same as those described in the summary of significant accounting policies (see(see Note 1 to the Company'sCompany’s Consolidated Financial Statements included in its Annual Report on Form 10-K for the year ended December 31, 2016)29, 2018).

Segment operating income includes selling, general and administrative expenses directly attributable to that segment as well as charges for allocating corporate costs to each of the operating segments.  The following tables reflect the results of the reportable segments consistent with the Company'sCompany’s management system: