10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from     to

Commission File Number: 001-07782

Parsons Corporation

(Exact Name of Registrant as Specified in its Charter)

Delaware	95-3232481
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
5875 Trinity Parkway #300 Centreville, Virginia	20120
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (703) 988-8500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1 par value	PSN	New York Stock Exchange

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  ☐    No  ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes  ☒    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 accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☐

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  ☒

As of November 4, 2019, the registrant had 99,262,334 shares of common stock, $1.00 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Cash Flows	4
	Consolidated Statements of Shareholders’ Equity (Deficit)	5
	Notes to Unaudited Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.	Controls and Procedures	46
PART II.	OTHER INFORMATION	47
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3.	Defaults Upon Senior Securities	47
Item 4.	Mine Safety Disclosures	47
Item 5.	Other Information	47
Item 6.	Exhibits	48
Signatures		49

i

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PARSONS CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share information)

(Unaudited)

		December 31, 2018			September 30, 2019
Assets
Current assets:
	Cash and cash equivalents (including $73,794 and $55,054 Cash of consolidated joint ventures)	$	280,221		$	133,870
	Restricted cash and investments		974			12,592
	Accounts receivable, net (including $180,325 and $164,460 Accounts receivable of consolidated joint ventures, net)		623,286			673,674
	Contract assets (including $21,270 and $26,542 Contract assets of consolidated joint ventures)		515,319			583,670
	Prepaid expenses and other current assets (including $11,837 and $8,149 Prepaid expenses and other current assets of consolidated joint ventures)		69,007			70,455
	Total current assets		1,488,807			1,474,261
	Property and equipment, net (including $2,561 and $3,171 Property and equipment of consolidated joint ventures, net)		91,849			109,238
	Right of use assets, operating leases		-			219,207
	Goodwill		736,938			1,050,077
	Investments in and advances to unconsolidated joint ventures		63,560			66,584
	Intangible assets, net		179,519			281,157
	Deferred tax assets		5,680			111,610
	Other noncurrent assets		46,225			50,510
	Total assets	$	2,612,578		$	3,362,644
Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
	Accounts payable (including $87,914 and $90,692 Accounts payable of consolidated joint ventures)	$	226,345		$	226,563
	Accrued expenses and other current liabilities (including $73,209 and $63,880 Accrued expenses and other current liabilities of consolidated joint ventures)		559,700			639,650
	Contract liabilities (including $38,706 and $43,324 Contract liabilities of consolidated joint ventures)		208,576			231,032
	Short-term lease liabilities, operating leases		-			49,074
	Income taxes payable		11,540			9,940
	Total current liabilities		1,006,161			1,156,259
	Long-term employee incentives		41,913			45,749
	Deferred gain resulting from sale-leaseback transactions		46,004			-
	Long-term debt		429,164			249,306
	Long-term lease liabilities, operating leases		-			188,571
	Deferred tax liabilities		6,240			7,337
	Other long-term liabilities		127,863			120,971
	Total liabilities		1,657,345			1,768,193
Commitments and contingencies (Note 13)
	Redeemable common stock held by Employee Stock Ownership Plan (ESOP), $1 par value; 78,172,809 and 78,138,602 shares outstanding, recorded at redemption value		1,876,309			2,577,011
Shareholders' equity (deficit):
	Common stock, $1 par value; authorized 1,000,000,000 shares; 125,097,684 and 146,393,959 shares issued; 0 and 21,296,275 shares outstanding		-			21,296
	Treasury stock, 46,918,140 and 46,959,082 shares at cost		(957,025	)		(957,844	)
	Additional paid-in capital		-			8,772
	Retained earnings (accumulated deficit)		12,445			(64,896	)
	Accumulated other comprehensive loss		(22,957	)		(17,982	)
	Total Parsons Corporation shareholders' equity (deficit)		(967,537	)		(1,010,654	)
	Noncontrolling interests		46,461			28,094
	Total shareholders' equity (deficit)		(921,076	)		(982,560	)
	Total liabilities, redeemable common stock and shareholders' equity (deficit)	$	2,612,578		$	3,362,644

The accompanying notes are an integral part of these consolidated financial statements.

1

PARSONS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income

(In thousands, except per share information)

(Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 28, 2018			September 30, 2019			September 28, 2018			September 30, 2019
Revenues	$	976,157		$	1,023,277		$	2,631,568		$	2,917,424
Direct costs of contracts		783,018			798,552			2,054,201			2,297,512
Equity in earnings of unconsolidated joint ventures		12,707			7,274			25,577			29,305
Indirect, general and administrative expenses		150,733			178,550			422,028			581,428
Operating income		55,113			53,449			180,916			67,789
Interest income		351			427			2,358			1,129
Interest expense		(5,940	)		(4,909	)		(14,475	)		(19,577	)
Other income (expense), net		696			(3,127	)		355			(1,580	)
Gain associated with claim on long-term contract		-			-			74,578			-
Total other income (expense)		(4,893	)		(7,609	)		62,816			(20,028	)
Income before income tax provision		50,220			45,840			243,732			47,761
Income tax benefit (provision)		(4,154	)		15,453			(18,526	)		67,063
Net income including noncontrolling interests		46,066			61,293			225,206			114,824
Net income attributable to noncontrolling interests		(4,844	)		(4,481	)		(10,316	)		(8,012	)
Net income attributable to Parsons Corporation	$	41,222		$	56,812		$	214,890		$	106,812
Earnings per share:
Basic and diluted	$	0.52		$	0.57		$	2.66		$	1.19

The accompanying notes are an integral part of these consolidated financial statements.

2

PARSONS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 28, 2018			September 30, 2019			September 28, 2018			September 30, 2019
Net income including noncontrolling interests	$	46,066		$	61,293		$	225,206		$	114,824
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment, net of tax		2,303			171			(3,079	)		4,958
Pension adjustments, net of tax		10			(9	)		(27	)		17
Comprehensive income including noncontrolling interests, net of tax		48,379			61,455			222,100			119,799
Comprehensive income attributable to noncontrolling interests, net of tax		(4,822	)		(4,481	)		(10,270	)		(8,012	)
Comprehensive income attributable to Parsons Corporation,    net of tax	$	43,557		$	56,974		$	211,830		$	111,787

The accompanying notes are an integral part of these consolidated financial statements.

3

PARSONS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

		For the Nine Months Ended
		September 28, 2018			September 30, 2019
Cash flows from operating activities:
	Net income including noncontrolling interests	$	225,206		$	114,824
	Adjustments to reconcile net income to net cash used in operating activities
	Depreciation and amortization		46,656			92,692
	Amortization of deferred gain		(5,440	)		-
	Amortization of debt issue costs		548			802
	Gain associated with claim on long-term contract		(129,674	)		-
	Loss on disposal of property and equipment		59			1,045
	Provision for doubtful accounts		9,094			(964	)
	Deferred taxes		1,281			(105,161	)
	Foreign currency transaction gains and losses		2,007			1,689
	Equity in earnings of unconsolidated joint ventures		(25,577	)		(29,305	)
	Return on investments in unconsolidated joint ventures		31,728			32,848
	Stock-based compensation		-			9,224
	Contributions of treasury stock		34,070			36,779
	Changes in assets and liabilities, net of acquisitions and newly consolidated    joint ventures:
	Accounts receivable		384,216			(31,726	)
	Contract assets		(527,768	)		(59,161	)
	Prepaid expenses and current assets		(13,028	)		2,980
	Accounts payable		38,424			(6,946	)
	Accrued expenses and other current liabilities		9,558			40,186
	Billings in excess of costs		(151,892	)		-
	Contract liabilities		168,579			20,703
	Provision for contract losses		(13,992	)		-
	Income taxes		3,250			(3,019	)
	Other long-term liabilities		12,517			13,138
	Net cash provided by operating activities		99,822			130,628
Cash flows from investing activities:
	Capital expenditures		(19,436	)		(44,030	)
	Proceeds from sale of property and equipment		112			2,824
	Payments for acquisitions, net of cash acquired		(481,163	)		(495,690	)
	Investments in unconsolidated joint ventures		(4,276	)		(11,446	)
	Return of investments in unconsolidated joint ventures		1,126			6,632
	Net cash used in investing activities		(503,637	)		(541,710	)
Cash flows from financing activities:
	Proceeds from borrowings		260,000			530,000
	Repayments of borrowings		(20,000	)		(710,000	)
	Payments for debt costs and credit agreement		(468	)		(286	)
	Contributions by noncontrolling interests		13,768			8,999
	Distributions to noncontrolling interests		(6,858	)		(35,378	)
	Purchase of treasury stock		(73,308	)		(819	)
	IPO proceeds, net		-			536,879
	Dividend paid		-			(52,093	)
	Net cash provided by financing activities		173,134			277,302
	Effect of exchange rate changes		(1,233	)		(953	)
	Net decrease in cash, cash equivalents, and restricted cash		(231,914	)		(134,733	)
	Cash, cash equivalents and restricted cash:
	Beginning of year		446,144			281,195
	End of period	$	214,230		$	146,462

The accompanying notes are an integral part of these consolidated financial statements.

4

PARSONS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity (Deficit)

For the Three Months Ended September 30, 2019 and September 28, 2018

(In thousands)

(Unaudited)

												Retained			Accumulated
	Redeemable								Additional			Earnings			Other			Total
	Common			Common		Treasury			Paid-in			(Accumulated			Comprehensive			Parsons			Noncontrolling
	Stock			Stock		Stock			Capital			Deficit)			Income (Loss)			Deficit			Interests			Total
Balance at June 30, 2019	$	2,880,189		$	21,296	$	(957,844	)	$	-		$	(424,886	)	$	(18,144	)	$	(1,379,578	)	$	37,352		$	(1,342,226	)
Comprehensive income
Net income		-			-		-			-			56,812			-			56,812			4,481			61,293
Foreign currency translation gain, net		-			-		-			-			-			171			171			-			171
Pension adjustments, net		-			-		-			-			-			(9	)		(9	)		-			(9	)
Contributions		-			-		-			-			-			-			-			852			852
Distributions		-			-		-			-			-			-			-			(14,591	)		(14,591	)
Stock-based compensation		-			-		-			9,224			-			-			9,224			-			9,224
IPO proceeds, net		-			-		-			(452	)		-			-			(452	)		-			(452	)
Accretion of redeemable common stock		(303,178	)		-		-			-			303,178			-			303,178			-			303,178
Balance at September 30, 2019	$	2,577,011		$	21,296	$	(957,844	)	$	8,772		$	(64,896	)	$	(17,982	)	$	(1,010,654	)	$	28,094		$	(982,560	)
Balance at June 29, 2018	$	1,822,309		$	-	$	(909,368	)	$	-		$	15,894		$	(20,397	)	$	(913,871	)	$	43,935		$	(869,936	)
Comprehensive income
Net income		-			-		-			-			41,222			-			41,222			4,844			46,066
Foreign currency translation gain, net		-			-		-			-			-			2,294			2,294			9			2,303
Pension adjustments, net		-			-		-			-			-			10			10			-			10
Purchase of treasury stock		(40,312	)		-		(40,312	)		-			40,312			-			-			-			-
Contributions		-			-		-			-			-			-			-			115			115
Distributions		-			-		-			-			-			-			-			(4,096	)		(4,096	)
Balance at September 28, 2018	$	1,781,997		$	-	$	(949,680	)	$	-		$	97,428		$	(18,093	)	$	(870,345	)	$	44,807		$	(825,538	)

The accompanying notes are an integral part of these consolidated financial statements.

5

PARSONS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity (Deficit)

For the Nine Months Ended September 30, 2019 and September 28, 2018

(In thousands)

(Unaudited)

												Retained			Accumulated
	Redeemable								Additional			Earnings			Other			Total
	Common			Common		Treasury			Paid-in			(Accumulated			Comprehensive			Parsons			Noncontrolling
	Stock			Stock		Stock			Capital			Deficit)			Income (Loss)			Deficit			Interests			Total
Balance at December 31, 2018	$	1,876,309		$	-	$	(957,025	)	$	-		$	12,445		$	(22,957	)	$	(967,537	)	$	46,461		$	(921,076	)
Comprehensive income
Net income		-			-		-			-			106,812			-			106,812			8,012			114,824
Foreign currency translation gain, net		-			-		-			-			-			4,958			4,958			-			4,958
Pension adjustments, net		-			-		-			-			-			17			17			-			17
ASC 842 transition adjustment		-			-		-			-			52,608			-			52,608			-			52,608
Purchase of treasury stock		(819	)		-		(819	)		-			819			-			-			-			-
Contributions		-			-		-			-			-			-			-			8,999			8,999
Distributions		-			-		-			-			-			-			-			(35,378	)		(35,378	)
Dividend paid		-			-		-			-			(52,093	)		-			(52,093	)		-			(52,093	)
Stock-based compensation		-			-		-			9,224			-			-			9,224			-			9,224
Conversion of S-Corp to C-Corp		25,877			-		-			-			(25,877	)		-			(25,877	)		-			(25,877	)
IPO proceeds, net		-			21,296		-			515,582			-			-			536,878			-			536,878
Accretion of redeemable common stock		675,644			-		-			(516,034	)		(159,610	)		-			(675,644	)		-			(675,644	)
Balance at September 30, 2019	$	2,577,011		$	21,296	$	(957,844	)	$	8,772		$	(64,896	)	$	(17,982	)	$	(1,010,654	)	$	28,094		$	(982,560	)
Balance at December 29, 2017	$	1,855,305		$	-	$	(876,372	)	$	-		$	(186,035	)	$	(15,003	)	$	(1,077,410	)	$	27,494		$	(1,049,916	)
Comprehensive income
Net income		-			-		-			-			214,890			-			214,890			10,316			225,206
Foreign currency translation (loss), net		-			-		-			-			-			(3,063	)		(3,063	)		(16	)		(3,079	)
Pension adjustments, net		-			-		-			-			-			(27	)		(27	)		-			(27	)
Adoption of ASC 606		-			-		-			-			(4,735	)		-			(4,735	)		103			(4,632	)
Purchase of treasury stock		(73,308	)				(73,308	)		-			73,308			-			-			-			-
Contributions		-					-			-			-			-			-			13,768			13,768
Distributions		-			-		-			-			-			-			-			(6,858	)		(6,858	)
Balance at September 28, 2018	$	1,781,997		$	-	$	(949,680	)	$	-		$	97,428		$	(18,093	)	$	(870,345	)	$	44,807		$	(825,538	)

The accompanying notes are an integral part of these consolidated financial statements.

6

Parsons Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

1. Description of Operations

Organization

Parsons Corporation, a Delaware corporation, and its subsidiaries (collectively, the “Company”) provide sophisticated design, engineering and technical services, and smart and agile software to the United States federal government and Critical Infrastructure customers worldwide. The Company performs work in various foreign countries through local subsidiaries, joint ventures and foreign offices maintained to carry out specific projects.

Initial Public Offering

On May 8, 2019, the Company consummated its initial public offering (“IPO”) whereby the Company sold 18,518,500 shares of common stock for $27.00 per share.  The underwriters exercised their share option on May 14, 2019 to purchase an additional 2,777,775 shares at the share price of $25.515 which was the IPO share price of $27.00 less the underwriting discount of $1.485 per share.  The net proceeds of the IPO and the underwriters’ share option were $536.9 million, after deducting underwriting discounts and other fees, and were used to fund an IPO dividend of $52.1 million, repay the outstanding balance of $150.0 million under our Term Loan, and repay outstanding indebtedness under our Revolving Credit Facility.

Stock Dividend

On April 15, 2019, the board of directors of the Company declared a common stock dividend in a ratio of two shares of common stock for every one share of common stock presently held by the Company’s stockholder (the “Stock Dividend”). The record date of this common Stock Dividend, which the Company refers to as the Stock Dividend was May 7, 2019, the day immediately prior to the consummation of the Company’s IPO on May 8, 2019, and the payment date of the Stock Dividend was May 8, 2019. Purchasers of the Company’s common stock in the Company’s public offering were not entitled to receive any portion of the Stock Dividend.

2. Basis of Presentation and Principles of Consolidation

The accompanying unaudited consolidated financial statements and related notes of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") and pursuant to the interim period reporting requirements of Form 10-Q.  They do not include all of the information and footnotes required by GAAP for complete financial statements and, therefore, should be read in conjunction with our consolidated financial statements and the notes thereto included in the Company’s Form S-1/A filed on April 29, 2019.

In the opinion of management, the consolidated financial statements reflect all normal recurring adjustments necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented.  The results of operations and cash flows for any interim period are not necessarily indicative of results for the full year or for future years.  

This Quarterly Report on Form 10-Q includes the accounts of our wholly-owned subsidiaries, and joint ventures of which we are the primary beneficiary.  The equity method of accounting is applied for the joint ventures in which the Company does not have a controlling interest, but exerts a significant influence (see “Note 15 –Investments in and Advances to Joint Ventures" for further discussion).

In the first quarter of 2019 the Company adopted Accounting Standards Update (‘ASU”) 2016-02, “Leases” (“Topic 842”), using the modified retrospective method.  The new guidance was applied to leases that existed or were entered into on or after January 1, 2019.  The Company’s results for the reporting period beginning January 1, 2019 have been presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with previous guidance.  See “Note 6 – Leases” for further discussion of the adoption and the impact on the Company’s financial statements.

7

Accumulated Deficit

The Company's accounting policy is to record dividends and accretion of redeemable stock as a reduction of retained earnings. In the absence of retained earnings, the Company will charge the dividends and/or accretion of redeemable stock to Additional Paid-in Capital until depleted and will then charge the remainder to accumulated deficit. As a result of the change in tax status from "S" Corporation to "C" Corporation in the second quarter of 2019, the Company reclassified historical retained earnings for the "S" Corporation from retained earnings to Additional Paid in Capital as of the date of conversion. Subsequent changes in accumulated deficit are related to increases or decreases in the maximum redemption value of redeemable common stock.

Fiscal Periods

In October 2018, our board of directors approved a change in our annual and quarterly fiscal period ends from the last Friday on or before the calendar year or quarterly month-end to the last day of the calendar year or quarterly month-end. Accordingly, the period end for the first, second, and third quarters of fiscal 2018 and fiscal 2019 are March 30, 2018, June 29, 2018, and September 28, 2018, respectively, and March 31, 2019, June 30, 2019, and September 30, 2019, respectively.  The number of days in the three- and nine-month periods ended September 28, 2018 and September 30, 2019 were 91 and 273, respectively, and 92 and 273, respectively.

Use of Estimates

The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates. The Company’s most significant estimates and judgments involve revenue recognition with respect to the determination of the costs to complete contracts and transaction price; determination of self-insurance reserves; valuation of the Company’s fair value of common stock (for periods prior to the IPO); useful lives of property and equipment and intangible assets; calculation of allowance for doubtful accounts; valuation of deferred income tax assets and uncertain tax positions, among others. Please see “Note 2 – Summary of Significant Accounting Policies” of Notes to Consolidated Financial Statements included in the Company’s Form S-1/A filed April 29, 2019, for a discussion of the significant estimates and assumptions affecting our consolidated financial statements.  Estimates of costs to complete contracts are continually evaluated as work progresses and are revised when necessary. When a change in estimate is determined to have an impact on contract profit, the Company records a positive or negative adjustment to the consolidated statement of income.

Inventory

Included in Prepaid expenses and other current assets in the Company’s consolidated balances sheets is inventory.  Inventory consists of uninstalled materials received by the Company awaiting installation at our project sites and raw materials, work-in-process, and finished goods related to the manufacture of advance technology equipment.  Uninstalled materials inventory and the inventory related to advance technology equipment is carried on the Company’s consolidated balance sheets at the lower of cost (which approximates average cost) or net realizable value.

Redeemable Common Stock

In connection with the Company’s IPO on May 8, 2019, all Employee Stock Ownership Plan (“ESOP”) shares were contingently redeemable for cash during the 180-day lock-up period which ended on November 3, 2019.  During the 180-day lock-up period, the Company presented all shares held by the ESOP as temporary equity on the consolidated balance sheets as Redeemable common stock held by Employee Stock Ownership Plan (ESOP) at their redemption value.  The consolidated balance sheet, to be presented in the Company’s 2019 Annual Report on Form 10-K, at December 31, 2019 will reflect the reclassification of redeemable common stock held by the ESOP from temporary equity to permanent equity as the lock-up period expires in the fourth quarter.  At the conclusion of the lock-up period all shares held by the ESOP will be redeemable by participants in shares of the Company’s common stock once vesting and eligibility requirements have been met.  

8

3. Recently AdoptedAccounting Pronouncements

In the first quarter of 2019, the Company adopted Topic 842.  See “Note 6 – Leases” for further discussion of the adoption and the impact on the Company’s financial statements.

In the first quarter of 2019, the Company adopted ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” under which the Company did not elect to reclassify the income tax effects stranded in accumulated other comprehensive income to retained earnings as a result of the enactment of comprehensive tax legislation, commonly referred to as the Tax Cuts and Jobs Act.  As a result, there was no impact on the Company’s financial position, results of operations or cash flows.

On December 30, 2017, the Company adopted ASC 606, “Revenue from Contracts with Customers,” using the modified retrospective method, which provides for a cumulative effect adjustment to retained earnings beginning in fiscal 2018 for those uncompleted contracts impacted by the adoption of the new standard. The difference between the recognition criteria under ASC 606 and our previous recognition practices under ASC 605-35 was recognized through a cumulative adjustment of $4.7 million that was made to the opening balance of accumulated deficit as of December 30, 2017.

In January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the test for goodwill impairment by removing the second step of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance is effective for interim and annual reporting periods beginning after December 15, 2019 and should be applied prospectively with early adoption permitted. The Company early adopted the new standard as of the beginning of fiscal 2018 and its adoption did not have a material impact on the consolidated financial statements.

4. Acquisitions

Polaris Alpha

On May 31, 2018, the Company acquired a 100% ownership interest in Polaris Alpha, a privately owned, advanced technology-focused provider of innovative mission solutions for complex defense, intelligence, and security customers, as well as other U.S. federal government customers, for $489.1 million paid in cash. The Company borrowed $260 million under the credit agreement, as described in “Note 11 – Debt and Credit Facilities,” to partially fund the acquisition. In connection with this acquisition, the Company recognized $6.2 million of acquisition-related expenses in “Indirect, general and administrative expense” in the consolidated statements of income for the fiscal year ended December 31, 2018, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. Polaris Alpha enhances the Company’s artificial intelligence and data analytics expertise with new technologies and solutions. Customers of both companies will benefit from existing, complementary technologies and increased scale, enabling end-to-end solutions under the shared vision of rapid prototyping and agile development.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed (in thousands):

	Amount
Cash and cash equivalents	$	7,914
Accounts receivable		29,688
Contract assets		35,229
Prepaid expenses and other current assets		9,295
Property and equipment		9,024
Goodwill		243,471
Intangible assets		199,520
Other noncurrent assets		2,203
Accounts payable		(13,942	)
Accrued expenses and other current liabilities		(26,419	)
Contract liabilities		(3,529	)
Deferred tax liabilities		(2,231	)
Other long-term liabilities		(1,146	)
Net assets acquired	$	489,077

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Of the total purchase price, the following values were assigned to intangible assets (in thousands, except for years):

	Gross Carrying Amount		Amortization Period
			(in years)
Developed technology	$	84,900	4
Customer relationships		76,000	8
Backlog		34,900	2
Trade name		3,600	1
Leases	$	120	6

Amortization expense of $13.0 million and $13.2 million related to these intangible assets was recorded for the three months ended September 28, 2018 and September 30, 2019, respectively, and $17.3 million and $41.2 million for the nine months ended September 28, 2018 and September 30, 2019, respectively. The entire value of goodwill of $243.5 million was assigned to the Parsons Federal reporting unit and represents synergies expected to be realized from this business combination. Goodwill of $50.1 million isdeductible for tax purposes.

The amount of revenue generated by Polaris Alpha and included within consolidated revenues is $94.8 million and $96.9 million for the three months ended September 28, 2018 and September 30, 2019, respectively, and $124.7 million and $293.0 million for the nine months ended September 28, 2018 and September 30, 2019, respectively. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition.

Supplemental Pro Forma Information

Supplemental information on an unaudited pro forma operating results assuming the Polaris Alpha acquisition had been consummated as of the beginning of fiscal year 2018 (December 31, 2017) (in thousands) is as follows:

	Three Months Ended		Nine Months Ended
	September 28, 2018		September 28, 2018
Pro forma revenue	$	976,157	$	2,784,864
Pro forma net income including noncontrolling interests	$	46,848	$	179,071

The unaudited pro forma supplemental information is based on estimates and assumptions which the Company believes are reasonable and reflects the pro forma impact of additional amortization related to the fair value of acquired intangible assets, pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses and the additional pro forma interest expense related to the borrowings under the credit agreement as of the assumed acquisition date. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been consummated during the periods for which pro forma information is presented.

OGSystems

On January 7, 2019, the Company acquired a 100% ownership interest in OGSystems, a privately owned company, for $292.4 million paid in cash. OGSystems provides geospatial intelligence, big data analytics and threat mitigation for defense and intelligence customers.  The Company borrowed $110 million under the credit agreement and $150 million on a short-term loan, as described in “Note 11 – Debt and Credit Facilities,” to partially fund the acquisition. In connection with this acquisition, the Company recognized $0.6 million and $5.5 million of acquisition-related expenses in “Indirect, general and administrative expense” in the consolidated statements of income for the three and nine months ended September 30, 2019, respectively, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. OGSystems enhances the Company’s artificial intelligence and data analytics expertise with new technologies and solutions. Customers of both companies will benefit from existing, complementary technologies and increased scale, enabling end-to-end solutions under the shared vision of rapid prototyping and agile development.

10

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed based on the preliminary purchase price allocation as of the date of acquisition (in thousands):

	Amount
Cash and cash equivalents	$	5,772
Accounts receivable		9,904
Contract assets		9,747
Prepaid expenses and other current assets		4,307
Property and equipment		4,085
Right of use assets, operating leases		8,826
Goodwill		183,540
Intangible assets		92,300
Other noncurrent assets		10
Accounts payable		(5,450	)
Accrued expenses and other current liabilities		(7,147	)
Contract liabilities		(1,300	)
Short-term lease liabilities, operating leases		(805	)
Income tax payable		(1,469	)
Deferred tax liabilities		(904	)
Long-term lease liabilities, operating leases		(8,021	)
Other long-term liabilities		(1,015	)
Net assets acquired	$	292,380

Of the total purchase price, the following values were assigned to intangible assets (in thousands, except for years):

	Gross Carrying Amount		Amortization Period
			(in years)
Customer relationships	$	57,100	5
Backlog		27,700	3
Trade name		3,800	2
Non-compete agreements		2,400	3
Developed technologies	$	1,300	3

The Company is still in the process of finalizing its valuation of developed technology acquired.

Amortization expense of $5.9 million and $17.8 million related to these intangible assets was recorded for the three and nine months ended September 30, 2019, respectively. The entire value of goodwill of $183.5 million was assigned to the Parsons Federal reporting unit and represents synergies expected to be realized from this business combination. Goodwill of $16.0 million is deductible for tax purposes.

The amount of revenue generated by OGSystems since the acquisition and included within consolidated revenues for the three and nine months ended September 30, 2019 is $33.7 million and $108.7 million, respectively. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition.

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Supplemental Pro Forma Information

Supplemental information on an unaudited pro forma operating results assuming the OGSystems acquisition had been consummated as of the beginning of fiscal year 2018 (December 31, 2017) (in thousands) is as follows:

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Pro forma revenue	$	1,007,793	$	1,023,277	$	2,715,572	$	2,919,379
Pro forma net income including noncontrolling interests	$	39,224	$	61,293	$	196,905	$	118,896

The unaudited pro forma supplemental information is based on estimates and assumptions which the Company believes are reasonable and reflects the pro forma impact of additional amortization related to the fair value of acquired intangible assets, pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses and the additional pro forma interest expense related to the borrowings under the credit agreement as of the assumed acquisition date. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been consummated during the periods for which pro forma information is presented.

QRC Technologies

On July 31, 2019 the Company acquired a 100% ownership interest in QRC Technologies (“QRC”), a privately owned company, for $214.1 million in cash.  QRC provides design and development of open-architecture radio-frequency products.  The company borrowed $140.0 million under the Revolving Credit Facility to partially fund the transaction. In connection with this acquisition, the Company recognized $4.7 million of acquisition-related expenses in “Indirect, general and administrative expense” in the consolidated statements of income for the three and nine months ended September 30, 2019 including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. QRC is an agile, disruptive product company that specializes in radio frequency spectrum survey, record and playback; signals intelligence; and electronic warfare missions. QRC complements our existing portfolio, increases our presence in the high-growth markets of spectrum awareness and surveillance, adds critical intellectual property that complements and expands our available capabilities for the Special Operations and Intelligence Communities.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed based on the preliminary purchase price allocation as of the date of acquisition (in thousands):

	Amount
Cash and cash equivalents	$	5,925
Accounts receivable		5,587
Prepaid expenses and other current assets		5,467
Property and equipment		1,205
Right of use assets, operating leases		5,228
Goodwill		128,387
Intangible assets		72,900
Accounts payable		(1,567	)
Accrued expenses and other current liabilities		(3,771	)
Short-term lease liabilities, operating leases		(545	)
Long-term lease liabilities, operating leases		(4,683	)
Net assets acquired	$	214,133

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Of the total purchase price, the following values were assigned to intangible assets (in thousands, except for years):

	Gross Carrying Amount		Amortization Period
			(in years)
Customer relationships	$	47,600	12
Backlog		700	1
Trade name		800	2
Non-compete agreements		1,200	4
Developed technologies	$	22,600	3-5

The Company is still in the process of finalizing its valuation of the net assets acquired.

Amortization expense of $1.9 million related to these intangible assets was recorded for the three and nine months ended September 30, 2019, respectively. The entire value of goodwill of $128.4 million was assigned to the Parsons Federal reporting unit and represents synergies expected to be realized from this business combination. Goodwill in it’s entirety is deductible for tax purposes.

The amount of revenue generated by QRC since the acquisition and included within consolidated revenues for both the three and nine months ended September 30, 2019 is $5.6 million. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition.

Supplemental Pro Forma Information

Supplemental information on an unaudited pro forma operating results assuming the QRC Technologies acquisition had been consummated as of the beginning of fiscal year 2018 (December 31, 2017) (in thousands) is as follows:

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Pro forma revenue	$	987,343	$	1,026,831	$	2,657,105	$	2,938,973
Pro forma net income including noncontrolling interests	$	44,944	$	65,782	$	212,728	$	117,399

5. Contracts with Customers

Disaggregation of Revenue

The Company’s contracts contain both fixed-price and cost reimbursable components. Contract types are based on the component that represents the majority of the contract. The following table presents revenue disaggregated by contract type (in thousands):

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Fixed-Price	$	300,225	$	288,316	$	833,224	$	850,658
Time-and-Materials		254,435		285,586		732,555		810,656
Cost-Plus		421,497		449,375		1,065,789		1,256,110
Total	$	976,157	$	1,023,277	$	2,631,568	$	2,917,424

See “Note 19 – Segments Information” for the Company’s revenues by business lines.

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Contract Assets and Contract Liabilities

Contract assets and contract liabilities balances at December 31, 2018 and September 30, 2019 were as follows (in thousands):

	December 31, 2018		September 30, 2019		$ change		% change
Contract assets	$	515,319	$	583,670	$	68,351		13.3	%
Contract liabilities		208,576		231,032		22,456		10.8	%
Net contract assets (liabilities) (1)	$	306,743	$	352,638	$	45,895		15.0	%

(1) Total contract retentions included in net contract assets (liabilities) were $89.6 millionas of December 31, 2018. Total contract retentions included in net contract assets (liabilities) were $87.1 millionas of September 30, 2019, of which $39.7 millionare not expected to be paid in the next 12 months. Contract assets at December 31, 2018 and September 30, 2019 include$47.1 million and $58.9 million,respectively, related to unapproved change orders, claims, and requests for equitable adjustment. For the three and nine months ended September 28, 2018 and September 30, 2019, there were no material losses recognized related to the collectability of claims, unapproved change orders, and requests for equitable adjustment.

During the three months ended September 28, 2018 and September 30, 2019, the Company recognized revenue of $0.8 million and$2.1 million, respectively, and $100.4 million and $115.1 million during the nine months ended September 28, 2018 and September 30, 2019, respectively, that was included in the corresponding contract liability balance at December 30, 2017 and December 31, 2018, respectively. The changes in contract assets and contract liabilities were the result of normal business activity and not significantly impacted by other factors, except as follows:

	December 31, 2018		September 30, 2019
Acquired contract assets	$	35,229	$	9,747
Acquired contract liabilities		3,529		1,300
Change in the estimate of variable consideration		-		14,506
Reversal of provision for contract losses (1)	$	133,180	$	-

(1) Reversal of provision for contract losses of $133.2 million, of which $55.1 million was recorded as an increase in revenue with the remainder recorded as other income.

There was no significant impairment of contract assets recognized during the three and nine months ended September 28, 2018 and September 30, 2019.

Revisions in estimates, such as changes in estimated claims or incentives, related to performance obligations partially satisfied in previous periods that individually had an impact of $5 million or more on revenue resulted in an increase in revenue of $9.1 million for the three and nine months ended September 30, 2019, and no amounts for the three and nine months ended September 28, 2018.    

Accounts Receivable, net

Accounts receivable, net consisted of the following as of December 31, 2018 and September 30, 2019 (in thousands):

	December 31, 2018			September 30, 2019
Billed	$	538,808		$	516,099
Unbilled		135,180			200,477
Total accounts receivable, gross		673,988			716,576
Allowance for doubtful accounts		(50,702	)		(42,902	)
Total accounts receivable, net	$	623,286		$	673,674

Billed accounts receivable represents amounts billed to clients that have not been collected. Unbilled accounts receivable represents amounts where the Company has a present contractual right to bill but an invoice has not been issued to the customer at the period-end date.

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The allowance for doubtful accounts was determined based on consideration of trends in actual and forecasted credit quality of clients, including delinquency and payment history, type of client, such as a government agency or commercial sector client, and general economic conditions and particular industry conditions that may affect a client’s ability to pay.

Transaction Price Allocated to the Remaining Unsatisfied Performance Obligations

The Company’s remaining unsatisfied performance obligations (“RUPO”) as of September 30, 2019 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress. The Company had $5.1 billion in RUPO as of September 30, 2019.

RUPO will increase with awards of new contracts and decrease as the Company performs work and recognizes revenue on existing contracts. Projects are included within RUPO at such time the project is awarded and agreement on contract terms has been reached. The difference between RUPO and backlog relates to unexercised option years that are included within backlog and the value of Indefinite Delivery/Indefinite Quantity (“IDIQ”) contracts included in backlog for which delivery orders have not been issued.

RUPO is comprised of: (a) original transaction price, (b) change orders for which written confirmations from our customers have been received, (c) pending change orders for which the Company expects to receive confirmations in the ordinary course of business, and (d) claim amounts that the Company has made against customers for which it has determined that it has a legal basis under existing contractual arrangements and a significant reversal of revenue is not probable, less revenue recognized to-date.

The Company expects to satisfy its RUPO as of September 30, 2019 over the following periods (in thousands):

Period RUPO Will Be Satisfied	Within One Year		Within One to Two Years		Thereafter
Federal Solutions	$	1,198,634	$	436,620	$	208,734
Critical Infrastructure		1,636,525		960,469		643,170
Total	$	2,835,159	$	1,397,089	$	851,904

6. Leases

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)”, which is a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets obtained in exchange for lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

The Company elected to adopt the standard, and available practical expedients, effective January 1, 2019.  These practical expedients allowed the Company to keep the lease classification assessed under the previous lease accounting standard (ASC 840) without reassessment under the new standard, and allowed all separate lease components, including non-lease components, to be accounted for as a single lease component for all existing leases prior to adoption of the new standard.  Furthermore, the Company made an accounting policy election to not recognize a lease liability and ROU asset for leases with lease terms of twelve months or less.  

The Company adopted this new standard under the modified retrospective transition approach without adjusting comparative periods in the financial statements, as allowed under Topic 842, and implemented internal controls and key system functionality to enable the preparation of financial information on adoption.

The standard had a material impact on the Company’s consolidated balance sheets but did not have an impact on the consolidated income statements. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while accounting for finance leases remained substantially unchanged.

15

As a result of the adoption, the Company recorded a cumulative-effect adjustment to retained earnings of $52.6 million net of deferred tax asset adjustment of $0.7 million, representing the unamortized portion of a deferred gain previously recorded as a sale-leaseback transaction associated with the sale of an office building in 2011. The Company concluded the transaction resulted in the transfer of control of the office building to the buyer-lessor at market terms and would have qualified as a sale under Topic 842 with gain recognition in the period the sale was recognized.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets and current and long-term operating lease liabilities in the consolidated balance sheets. Finance leases are included in other noncurrent assets, accrued expenses and other current liabilities and other long-term liabilities in the consolidated balance sheets.  

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, incremental borrowing rates are used based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components, which are generally accounted for separately. For certain equipment leases, such as vehicles, we account for the lease and non-lease components as a single lease component. Additionally, for certain equipment leases, we apply a portfolio approach to effectively account for the operating lease ROU assets and liabilities.

The Company has operating and finance leases for corporate and project office spaces, vehicles, heavy machinery and office equipment. Our leases have remaining lease terms of one year to 10 years, some of which may include options to extend the leases for up to five years, and some of which may include options to terminate the leases up to the seventh year. As of September 30, 2019, assets recorded under finance leases were $1.8 millionand accumulated depreciation associated with finance leases was $0.5 million.

The components of lease costs for the three and nine months ended September 30, 2019 are as follows (in thousands):

	Three Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2019
Operating lease cost	$	17,969		$	53,835
Short-term lease cost		5,429			10,925
Amortization of right-of-use assets		120			455
Interest on lease liabilities		15			46
Sublease income		(712	)		(2,727	)
Total lease cost	$	22,821		$	62,534

Supplemental cash flow information related to leases for the nine months ended September 30, 2019 is as follows (in thousands):

	Nine Months Ended
	September 30, 2019
Operating cash flows for operating leases	$	52,056
Operating cash flows for financing activities		570
Right-of-use assets obtained in exchange for new operating lease liabilities		274,212
Right-of-use assets obtained in exchange for new finance lease liabilities	$	1,818

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Supplemental balance sheet and other information related to leases as of September 30, 2019 is as follows (in thousands):

	September 30, 2019
Operating Leases:
Right-of-use assets	$	219,207
Lease liabilities:
Current	$	49,074
Long-term		188,571
Total operating lease liabilities	$	237,645
Finance Leases:
Other noncurrent assets	$	1,362
Lease liabilities:
Accrued expenses and other current liabilities	$	558
Other long-term liabilities		736
Total finance lease liabilities	$	1,294
Weighted Average Remaining Lease Term:
Operating leases	6 years
Finance leases	3 years
Weighted Average Discount Rate:
Operating leases		4.3	%
Finance leases		4.4	%

As of September 30, 2019, the Company has additional operating leases, primarily for office spaces, that have not yet commenced of $37.0 million. These operating leases will commence in 2019 with lease terms of 2 years to 11 years.

A maturity analysis of the future undiscounted cash flows associated with the Company’s operating and finance lease liabilities as of September 30, 2019 is as follows (in thousands):

	Operating Leases			Finance Leases
2019	$	15,409		$	160
2020		54,561			574
2021		50,333			421
2022		44,160			187
2023		36,996			25
Thereafter		64,423			-
Total lease payments		265,882			1,367
Less: imputed interest		(28,237	)		(73	)
Total present value of lease liabilities	$	237,645		$	1,294

As of December 31, 2018, $276.7 million of minimum rental commitments on operating leases was payable as follows: $67.9 million in 2019, $51.0 million in 2020, $42.5 million in 2021, $35.9 million in 2022, $29.4 million in 2023, and $50.0 million thereafter. Rental expense for the three and nine months ended September 28, 2018 was $21.7 million and $59.7 million, respectively.

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7. Goodwill

The following table summarizes the changes in the carrying value of goodwill by reporting segment at December 31, 2018 and September 30, 2019 (in thousands):

	December 31, 2018		Acquisitions		Foreign Exchange		September 30, 2019
Federal Solutions	$	666,841	$	311,860	$	-	$	978,701
Critical Infrastructure		70,097		-		1,279		71,376
Total	$	736,938	$	311,860	$	1,279	$	1,050,077

8. Intangible Assets

The gross amount and accumulated amortization of intangible assets with finite useful lives included in “Intangible assets, net” on the consolidated balance sheets are as follows (in thousands except for years):

	December 31, 2018							September 30, 2019							Weighted Average
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Amortization Period (in years)
Backlog	$	80,754	$	(58,295	)	$	22,459	$	109,155	$	(80,321	)	$	28,834		3
Customer relationships		121,629		(38,974	)		82,655		226,329		(60,266	)		166,063		7
Leases		670		(561	)		109		670		(576	)		94		5
Developed technology		87,839		(15,174	)		72,665		111,739		(32,545	)		79,194		4
Trade name		3,600		(2,100	)		1,500		8,200		(5,092	)		3,108		1
Non-compete agreements		-		-			-		3,600		(650	)		2,950		3
Other intangibles		275		(145	)		130		1,076		(162	)		914		10
Total intangible assets	$	294,767	$	(115,249	)	$	179,518	$	460,769	$	(179,612	)	$	281,157

The aggregate amortization expense of intangible assets for the three months ended September 28, 2018 and September 30, 2019 was $14.8 million and $22.1 million, respectively, and for the nine months ended September 30, 2018 and September 30, 2019 was $22.7 million and $64.5 million, respectively.

Estimated amortization expense in each of the next five years and beyond is as follows (in thousands):

	September 30, 2019
2019 (remaining)	$	23,049
2020		83,511
2021		78,778
2022		34,517
2023		22,599
Thereafter		38,703
Total	$	281,157

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9. Property and Equipment, Net

Property and equipment consisted of the following at December 31, 2018 and September 30, 2019 (in thousands):

	December 31, 2018			September 30, 2019			Useful lives (years)
Buildings and leasehold improvements	$	54,348		$	71,698		1-15
Furniture and equipment		81,705			85,322		3-10
Computer systems and equipment		148,255			168,241		3-10
Construction equipment		12,074			11,753		5-7
Accumulated depreciation		(204,533	)		(227,776	)
Property and equipment, net	$	91,849		$	109,238

Depreciation expense for the three months ended September 28, 2018 and September 30, 2019 was$8.8 million and $8.9 million, respectively, and $24.0 million and $28.2 million, respectively, for the nine months ended September 28, 2018 and September 30, 2019.

10. Sale-Leasebacks

During fiscal 2011, the Company consummated two sale-leaseback transactions associated with the sale of two office buildings from which the Company recognized a total gain in the consolidated statements of income (loss) of $106.7 million and a total deferred gain of $107.8 million. The current and long-term portion of the deferred gain had been recorded in “Accrued expenses and other current liabilities” and “Deferred gain resulting from sale-leaseback transactions” on the consolidated balance sheet at December 31, 2018, respectively, and was being recognized ratably over the minimum lease terms to which they relate, as an offset to rental expense in “Indirect, general and administrative expenses” in the consolidated statements of income. Amortization of the deferred gain was $1.8 millionfor the three months ended September 28, 2018 and $5.4 millionfor the nine months ended September 28, 2018. The deferred gain balance of $53.3 million as of December 31, 2018 was recognized as an adjustment to beginning retained earnings net of a deferred tax asset adjustment of $0.7 million during January 2019 in connection with the adoption of the new leasing standard. See “Note 6 – Leases”.

11. Debt and Credit Facilities

Debt consisted of the following (in thousands):

Long-Term:	December 31, 2018			September 30, 2019
Revolving credit facility	$	180,000		$	-
Senior notes		250,000			250,000
Debt issuance costs		(836	)		(694	)
Total long-term	$	429,164		$	249,306

In November 2017, the Company entered into an amended and restated Credit Agreement. The Company incurred $2.0 million of costs in connection with this amendment. Under the agreement, the Company’s revolving credit facility was increased from $500 million to $550 million and the term of the agreement was extended through November 2022. The borrowings under the Credit Agreement bear interest, at the Company’s option, at either the Base Rate (as defined in the Credit Agreement), plus an applicable margin, or LIBOR plus an applicable margin. The applicable margin for Base Rate loans is a range of 0.125% to 1.00% and the applicable margin for LIBOR loans is a range of 1.125% to 2.00%, both based on the leverage ratio of the Company at the end of each fiscal quarter. The rates at December 31, 2018 and September 30, 2019 were 4.253% and 3.350%, respectively. Borrowings under this Credit Agreement are guaranteed by certain of the Company’s operating subsidiaries. Letters of credit commitments outstanding under this agreement aggregated to $49.8 million and $45.2 million at December 31, 2018 and September 30, 2019, respectively, which reduced borrowing limits available to the Company. Interest expense related to the credit agreement was $1.1 million and $6.4 million for the three and nine months ended September 30, 2019, respectively, and for the three and nine months ended September 28, 2018 was $2.5 million and $3.5 million, respectively.

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On July 1, 2014, the Company finalized a private placement whereby the Company raised an aggregate amount of $250.0 million in debt repayable as follows (in thousands):

Tranche	Debt Amount		Maturity Date	Interest Rates
Senior Note, Series A	$	50,000	July 15, 2021		4.44	%
Senior Note, Series B		100,000	July 15, 2024		4.98	%
Senior Note, Series C		60,000	July 15, 2026		5.13	%
Senior Note, Series D	$	40,000	July 15, 2029		5.38	%

The Company incurred $1.1 million of debt issuance costs in connection with the private placement. On August 10, 2018, the Company finalized an amended and restated intercreditor agreement related to this private placement to more closely align certain covenants and definitions with the terms under the 2017 amended and restated Credit Agreement and incurred $0.5 million of additional issuance costs. These costs are presented as a direct deduction from the debt on the face of the consolidated balance sheets.  Interest expense related to the Senior Notes for both the three and nine months ended September 28, 2018 and September 30, 2019 was $3.1 million and $9.3 million, respectively. The amortization of debt issuance costs and interest expense are recorded in “Interest expense” on the consolidated statements of income. The Company made interest payments related to the Senior Notes for both the three and nine months ended September 28, 2018 and September 30, 2019 of $6.2 million and $12.4 million, respectively.  Interest payable of $5.7 million and $2.6 million is recorded in “Accrued expenses and other current liabilities” on the consolidated balance sheets at December 31, 2018 and September 30, 2019, respectively, related to the Senior Notes.

The Credit Agreement and private placement includes various covenants, including restrictions on indebtedness, liens, acquisitions, investments or dispositions, payment of dividends and maintenance of certain financial ratios and conditions. The Company was in compliance with these covenants at December 31, 2018 and September 30, 2019.

The Company also has in place several secondary bank credit lines for issuing letters of credit, principally for foreign contracts, to support performance and completion guarantees. Letters of credit commitments outstanding under these bank lines aggregated $223.0 million and $220.6 million at December 31, 2018 and September 30, 2019, respectively.

Using a discounted cash flow technique that incorporates a market interest yield curve with adjustments for duration, optionality, and risk profile, the Company estimated the fair value (level 2) of its senior notes at September 30, 2019 approximates $269.3 million. See “Note 17 – Fair Value of Financial Instruments” for the definition of level 2 of the fair value hierarchy.

In January 2019, the Company borrowed $150.0 million under our Term Loan Agreement to partially finance the OGSystems acquisition.  On May 10, 2019, the Company used proceeds from its May 8, 2019 IPO to repay the $150.0 million outstanding balance under the Term Loan and this loan is now closed. Interest expense related to the term loan was $0 and $2.3 million for the three and nine months ended September 30, 2019, respectively.

Amortization of debt issuance costs for all the Company’s debt and credit facilities for the three months ended September 28, 2018 and September 30, 2019 was $0.2 million and $0.2 million, respectively and $0.5 million and $0.8 million for the nine months ended September 28, 2018 and September 30, 2019, respectively.

12. Income Taxes

Historically, the Company had elected to be taxed under the provisions of Subchapter “S” of the Internal Revenue Code for federal tax purposes. As a result, income had not been subject to U.S. federal income taxes or state income taxes in those states where the “S” Corporation status is recognized. Therefore, previously, no provision or liability for federal or state income tax had been provided in the consolidated financial statements except for those states where the “S” Corporation status was not recognized, or where states imposed a tax on “S” Corporations. The provision for income tax in the historical periods prior to the IPO consists of these state taxes and taxes from certain foreign taxes where the Company is subject to tax.

In connection with the Company’s IPO on May 8, 2019, the “S” Corporation status was terminated, and the Company is now treated as a “C” Corporation under the Code. The termination of the “S” Corporation election has had a material impact on the Company’s results of operations, financial condition, and cash flows as reflected in the June 30 and September 30, 2019 consolidated financial statements. The effective income tax rate has increased and net income has decreased as compared to the Company’s “S” Corporation tax years, since the Company is now subject to both U.S. federal and state corporate income taxes on its earnings.

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For US corporate income tax purposes, the Company will apportion its 2019 taxable income ratably between the “S” Corporation and “C” Corporation periods, as allowed by law.  This allocation of income will effectively result in a blended income tax rate for the 2019 year, as only the C corporation earnings will be subject to both U.S. federal and state corporate income tax while the “S” Corporation earnings will be subject to tax in those states that tax “S” Corporations or do not recognize “S” Corporation status. The Company has estimated our 2019 effective tax benefit rate to be (69.69)%.  The most significant item contributing to the difference between the effective rate and the statutory U.S. Federal income tax rate of 21.0% for the quarter ended September 30, 2019 is the tax impact of updating the revaluation of deferred tax assets and liabilities, resulting from the conversion from an “S” to a “C” Corporation.

   The termination for the “S” Corporation status has been treated as a change in tax status under Accounting Standards Codification 740, “Income Taxes”. These rules require that the deferred tax effects of a change in tax status be recorded to income from continuing operations on the date the “S” Corporation status terminates. During the quarter ended June 30, 2019 the Company recorded a discrete deferred tax benefit of $56 million for the estimated effect of the change in tax status, relating to the recognition of net deferred tax assets for temporary differences in existence on the date of conversion to a “C” Corporation. During the quarter ended September 30, 2019, the Company has updated the estimate to $85 million, representing an increase in expected benefit of $29 million. The update primarily relates to a change in the forecasted temporary differences as of the conversion, changes in deferred tax assets resulting from 2018 tax return-to-provision adjustments, and changes in tax accounting methods that were made with the 2018 tax return during the third quarter. This amount is subject to additional revision based upon actual results for the current year.The $29 million increase was recorded as a discrete tax benefit in the three months ended September 30, 2019.

The US government enacted comprehensive tax legislation on December 22, 2017, which is commonly referred to as the Tax Cuts and Jobs Act ("TCJA"). The TCJA significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective January 1, 2018. The TCJA also repealed the deduction for domestic production activities, limited the deductibility of certain executive compensation, and implemented a modified territorial tax system with the introduction of the Global Intangible Low-Taxed Income (“GILTI”) tax rules. The TCJA also imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries. As a Subchapter “S” corporation the TCJA had a limited effect on the Company’s 2018 effective tax rate. The Company calculated that as a “C” corporation in 2019, the provisions of TCJA, except for the statutory rate, will not have a material impact on the income tax provision.   Under GAAP, the Company is allowed to make an accounting policy election of either: (i) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost ” method); or (ii) factoring such amounts into the Company’s measurement of its deferred taxes (the “deferred” method).   For taxable income inclusions due to the GILTI tax rules, the Company has elected the period cost method and has included the impact in the estimated annual effective tax rate as of September 30, 2019.

As of September 30, 2019, the Company’s deferred tax assets included a valuation allowance of $18.1 million primarily related to foreign net operating loss carryforwards, foreign tax credit carryforwards, and capital losses that the Company determined are not more likely than not to be realized. The factors used to assess the likelihood of realization were the past performance of the related entities, forecasts of future taxable income, future reversals of existing taxable temporary differences, and available tax planning strategies that could be implemented to realize the deferred tax assets. The ability or failure to achieve the forecasted taxable income in these entities could affect the ultimate realization of deferred tax assets.

As of December 31,2018 and September 30, 2019, the liability for income taxes associated with uncertain tax positions was $9.9 million and $14.6 million, respectively.  Management believes it is unlikely that the liability for unrecognized tax benefits related to existing matters would increase or decrease within the next 12 months by a material amount.  The Company is routinely subject to tax audit in several jurisdictions.  Although adjustments could result from these audits, the Company is not aware of any issue that would materially change the liability for uncertain tax positions.

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13. Commitments and Contingencies

The Company is subject to certain lawsuits, claims and assessments that arise in the ordinary course of business. Additionally, the Company has been named as a defendant in lawsuits alleging personal injuries as a result of contact with asbestos products at various project sites. Management believes that any significant costs relating to these claims will be reimbursed by applicable insurance and, although there can be no assurance that these matters will be resolved favorably, management believes that the ultimate resolution of any of these claims will not have a material adverse effect on our consolidated financial position, results of operations, or cash flows. A liability is recorded when it is both probable that a loss has been incurred and the amount of loss or range of loss can be reasonably estimated.  When using a range of loss estimate, the Company records the liability using the low end of the range. The Company records a corresponding receivable for costs covered under its insurance policies.  Management judgment is required to determine the outcome and the estimated amount of a loss related to such matters. Management believes that there are no claims or assessments outstanding which would materially affect the consolidated results of operations or the Company’s financial position.

 On or about March 1, 2017, the Peninsula Corridor Joint Powers Board, or the JPB, filed a lawsuit against Parsons Transportation Group, Inc., or PTG, in the Superior Court of California, County of San Mateo, in connection with a positive train control project on which PTG was engaged prior to termination of its contract by the JPB. PTG had previously filed a lawsuit against the JPB for breach of contract and wrongful termination. The JPB seeks damages in excess of $100.0 million, which the Company is currently disputing. In addition to filing a complaint for breach of contract and wrongful termination, the Company has denied the allegations raised by the JPB and, accordingly, filed affirmative defenses. The Company is currently defending against the JPB’s claims and the parties are still engaged in discovery. The Company also has a professional liability insurance policy to the extent the JPB proves any errors or omissions occurred. At this time, we are unable to determine the probability of the outcome of the litigation or determine a potential range of loss, if any. The Company has also filed a third-party claim against a subcontractor for indemnification in connection with this matter.

In September 2015, a former Parsons employee filed an action in the United States District Court for the Northern District of Alabama against us as a qui tam relator on behalf of the United States (the “Relator”) alleging violation of the False Claims Act. The United States government did not intervene in this matter as it is allowed to do so under the statute. The Company filed a motion to dismiss the lawsuit on the grounds that the Relator did not meet the applicable statute of limitations. The District Court granted the motion to dismiss. The Relator’s attorney appealed the decision to the United States Court of Appeals of the Eleventh Circuit, which ultimately ruled in favor of the Relator, and the Company petitioned the United States Supreme Court to review the decision. The Supreme Court reviewed the decision and accepted the position of the Relator.  The case was thus remanded to the United States District Court for the Northern District of Alabama.  The defendants, including Parsons, will file appropriate pleadings opposing the allegations.   At this time, we are unable to determine the probability of the outcome of the litigation or determine a potential range of loss, if any.

Federal government contracts are subject to audits, which are performed for the most part by the Defense Contract Audit Agency (“DCAA”). Audits by the DCAA and other agencies consist of reviews of our overhead rates, operating systems and cost proposals to ensure that we account for such costs in accordance with the Cost Accounting Standards (“CAS”). If the DCAA determines we have not accounted for such costs in accordance with the CAS, the DCAA may disallow these costs. The disallowance of such costs may result in a reduction of revenue and additional liability for the Company. Historically, the Company has not experienced any material disallowed costs as a result of government audits. However, the Company can provide no assurance that the DCAA or other government audits will not result in material disallowances for incurred costs in the future. All audits of costs incurred on work performed through 2010 have been closed, and years thereafter remain open.

Although there can be no assurance that these matters will be resolved favorably, management believes that their ultimate resolution will not have a material adverse impact on the Company’s consolidated financial position, results of operations, or cash flows.

14. Retirement and Other Benefit Plans

The Company’s principal retirement benefit plan is the Parsons Employee Stock Ownership Plan (“ESOP”), a stock bonus plan, established in 1975 to cover eligible employees of the Company and certain affiliated companies. Contributions of treasury stock to the ESOP are made annually in amounts determined by the Company’s board of directors and are held in trust for the sole benefit of the participants. Shares allocated to a participant’s account are fully vested after six years of credited service, or in the event(s) of reaching age 65, death or disability while an active

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employee of the Company. All of the Company’s common stock was acquired by the ESOP in conjunction with a reorganization in 1984, which was financed by the Company.

Upon retirement, death, termination due to permanent disability, a severe financial hardship, conflict of interest or the exercise of diversification rights, participants’ interests in their ESOP accounts are redeemable at the current price per share of the stock.

There is a lock-up agreement in place through November 3, 2019 affecting the ability of the ESOP Trustee to trade shares of the Company’s stock.  During the lock-up period, the Trustee will redeem eligible participants’ interests in their ESOP accounts for cash, funded by the May 10, 2019 IPO Dividend described below.  If that cash is exhausted before the end of the lock-up period, participants will put their shares to the Company which will redeem them for cash.  Upon the expiration of the lock-up period, all shares held by the ESOP will be redeemable by participants in shares of the Company’s stock once vesting and eligibility requirements have been met. The Company presents all shares held by the ESOP as temporary equity on the consolidated balance sheets at their redemption value.  The Company elected the policy to adjust the temporary equity balance to the maximum redemption amount at each balance sheet date for units that are not currently redeemable.  Accordingly, at each balance sheet date, the Company will adjust the temporary equity balance to its maximum redemption amount with a corresponding offset to retained earnings.

Total ESOP contribution expense was $11.4 million and $12.3 million for the three months ended September 28, 2018 and September 30, 2019, respectively, and $34.1 million and $36.8 million for the nine months ended September 28, 2018 and September 30, 2019, respectively. The expense is recorded in “Direct costs of contracts” and “Indirect, general and administrative expense” in the consolidated statements of income. The fiscal 2019 ESOP contribution has not yet been made.  The amount is currently included in accrued liabilities.

At December 31, 2018 and September 30, 2019, 78,172,809 shares and 78,138,602 shares of the Company’s stock were held by the ESOP which the Company recorded at their aggregate redemption value of $1.9 billion and $2.6 billion, respectively. On April 3, 2019, the board of directors of the Company declared a cash dividend to the Company’s sole existing shareholder at that time, the ESOP, in the amount of $2.00 per share, or $52.1 million in the aggregate (the “IPO Dividend”). The IPO Dividend was paid on May 10, 2019. On April 15, 2019, the board of directors of the Company declared a common stock dividend in a ratio of two shares of common stock for every one share of common stock then held by the Company’s shareholder (the “Stock Dividend”). The record date of the Stock Dividend was May 7, 2019, the day immediately prior to the consummation of the Company’s IPO on May 8, 2019, and the payment date of the Stock Dividend was May 8, 2019. Purchasers of the Company’s common stock in the Company’s public offering were not entitled to receive any portion of the Stock Dividend. During the year ended December 31, 2018, the Company did not declare any dividends.  Please see the Company’sForm S-1/A, filed April 29, 2019, for a further discussion of the Company’s ESOP.

As part of an acquisition in 2014, the Company acquired a defined contribution pension plan, a defined benefit pension plan, and supplemental retirement plan. For the defined contribution pension plan, the Company contributes a base amount plus an additional amount based upon a predetermined formula. At December 31, 2018 and September 30, 2019, the defined benefit pension plan was in a net asset position of $1.7 million and $1.7 million, respectively, which is recorded in “Other noncurrent assets” on the consolidated balance sheets.

15. Investments in and Advances to Joint Ventures

The Company participates in joint ventures to bid, negotiate and complete specific projects. The Company is required to consolidate these joint ventures if it holds the majority voting interest or if the Company meets the criteria under the consolidation model, as described below.

The Company performs an analysis to determine whether its variable interests give the Company a controlling financial interest in a Variable Interest Entity (“VIE”) for which the Company is the primary beneficiary and should, therefore, be consolidated. Such analysis requires the Company to assess whether it has the power to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

The Company analyzed all of its joint ventures and classified them into two groups: (1) joint ventures that must be consolidated because they are either not VIEs and the Company holds the majority voting interest, or because they are VIEs and the Company is the primary beneficiary; and (2) joint ventures that do not need to be consolidated because they

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are either not VIEs and the Company holds a minority voting interest, or because they are VIEs and the Company is not the primary beneficiary.

Many of the Company’s joint venture agreements provide for capital calls to fund operations, as necessary; however, such funding is infrequent and is not anticipated to be material.

Letters of credit outstanding described in “Note 11 – Debt and Credit Facilities” that relate to project ventures are $76.8 million and $72.4 million at December 31, 2018 and September 30, 2019, respectively.

In the table below, aggregated financial information relating to the Company’s joint ventures is provided because their nature, risk and reward characteristics are similar. None of the Company’s current joint ventures that meet the characteristics of a VIE are individually significant to the consolidated financial statements.

Consolidated Joint Ventures

The following represents financial information for consolidated joint ventures included in the consolidated financial statements (in thousands):

	December 31, 2018		September 30, 2019
Current assets	$	287,227	$	254,204
Noncurrent assets		2,689		2,836
Total assets		289,916		257,040
Current liabilities		199,833		198,079
Total liabilities		199,833		198,079
Total joint venture equity	$	90,083	$	58,961

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Revenue	$	126,480	$	117,611	$	413,548	$	341,719
Costs		116,468		108,839		262,146		322,826
Net income	$	10,012	$	8,772	$	151,402	$	18,893
Net income attributable to noncontrolling interests	$	4,844	$	4,481	$	10,316	$	8,012

The assets of the consolidated joint ventures are restricted for use only by the particular joint venture and are not available for the Company’s general operations.

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Unconsolidated Joint Ventures

The Company accounts for its unconsolidated joint ventures using the equity method of accounting. Under this method, the Company recognizes its proportionate share of the net earnings of these joint ventures as “Equity in earnings (loss) of unconsolidated joint ventures” in the consolidated statements of income. The Company’s maximum exposure to loss as a result of its investments in unconsolidated VIEs is typically limited to the aggregate of the carrying value of the investment and future funding commitments.

The following represents the financial information of the Company’s unconsolidated joint ventures as presented in their unaudited financial statements (in thousands):

	December 31, 2018		September 30, 2019
Current assets	$	707,457	$	778,876
Noncurrent assets		876,385		956,367
Total assets		1,583,842		1,735,243
Current liabilities		560,306		625,949
Noncurrent liabilities		813,269		895,514
Total liabilities		1,373,575		1,521,463
Total joint venture equity		210,267		213,780
Investments in and advances to unconsolidated joint ventures	$	63,560	$	66,584

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Revenue	$	482,634	$	474,600	$	1,234,946	$	1,225,284
Costs		462,042		452,001		1,186,184		1,166,008
Net income	$	20,592	$	22,599	$	48,762	$	59,276
Equity in earnings of unconsolidated joint ventures	$	12,707	$	7,274	$	25,577	$	29,305

The Company received net distributions from (made contributions to) its unconsolidated joint ventures for the three months ended September 28, 2018 and September 30, 2019 of $20.1 million and $13.7 million, respectively, and $28.6 million and $28.0 million for the nine months ended September 28, 2018 and September 30, 2019, respectively.

16. Related Party Transactions

The Company often provides services to unconsolidated joint ventures and revenues include amounts related to recovering overhead costs for these services. Revenues related to services the Company provided to unconsolidated joint ventures for the three months ended September 28, 2018 and September 30, 2019, were $36.6 million and $28.8 million, respectively, and for the nine months ended September 28, 2018 and September 30, 2019, were $112.2 million and $113.1 million, respectively. For the three months ended September 28, 2018 and September 30, 2019, the Company incurred $28.2 millionand $20.5 million, respectively and for the nine months ended September 28, 2019 and September 30, 2019, $85.2 million and $86.3 million, respectively of reimbursable costs. Amounts included in the consolidated balance sheets related to services the Company provided to unconsolidated joint ventures is as follows (in thousands):

	December 31, 2018		September 30, 2019
Accounts receivable	$	38,742	$	44,637
Contract assets		2,648		2,734
Contract liabilities	$	10,861	$	5,517

17. Fair Value of Financial Instruments

The authoritative guidance on fair value measurement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (referred to as an “exit price”). At December 31, 2018 and September 30, 2019, the Company’s financial instruments include cash, cash equivalents, accounts receivable, accounts payable, and other liabilities. The fair values of these financial instruments approximate their carrying values due to their short-term maturities.

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Investments measured at fair value are based on one or more of the following three valuation techniques:

• Market approach—Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities;

• Cost approach—Amount that would be required to replace the service capacity of an asset (i.e., replacement cost); and

• Income approach—Techniques to convert future amounts to a single present amount based on market expectations (including present value techniques, option-pricing models and lattice models).

In addition, the guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are:

Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities;

Level 2 Pricing inputs that include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument; and

Level 3 Prices or valuations that require inputs that are both significant to the fair value measurements and unobservable.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following table sets forth assets associated with the pension plan in “Note 14 – Retirement and Other Benefit Plans” that are accounted for at fair value by Level within the fair value hierarchy.

Fair value as of December 31, 2018 (in thousands):

	Level 1		Level 2		Level 3		Total
Mutual funds	$	2,539	$	-	$	-	$	2,539
Fixed income		-		10,168		-		10,168
Cash and cash equivalents		361		-		-		361
	$	2,900	$	10,168	$	-	$	13,068

Fair value as of September 30, 2019 (in thousands):

	Level 1		Level 2		Level 3		Total
Mutual funds	$	2,888	$	-	$	-	$	2,888
Fixed income		-		10,579		-		10,579
Cash and cash equivalents		294		-		-		294
	$	3,182	$	10,579	$	-	$	13,761

As described in “Note 14 – Retirement and Other Benefit Plans,” the Company acquired a defined contribution pension plan, a defined benefit pension plan, and supplemental retirement plans. At December 31, 2018 and September 30, 2019, the Company measured the mutual funds held within the defined benefit pension plan at fair value using unadjusted quoted prices in active markets that are accessible for identical assets. The Company measured the fixed income securities using market bid and ask prices. The inputs that are significant to valuation of fixed income securities are generally observable and therefore have been classified as Level 2.

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The following table sets forth redeemable common stock associated with the ESOP in as described in “Note 14 – Retirement and Other Benefit Plans” that is accounted for at fair value by Level within the fair value hierarchy.

Fair value as of December 31, 2018 (in thousands):

	Level 1		Level 2		Level 3		Total
Redeemable common stock	$	-	$	-	$	1,876,309	$	1,876,309

Fair value as of September 30, 2019 (in thousands):

	Level 1		Level 2		Level 3		Total
Redeemable common stock	$	2,577,011	$	-	$	-	$	2,577,011

As described in “Note 14 – Retirement and Other Benefit Plans,” the Company is obligated to redeem eligible participants’ interests in their ESOP accounts for cash upon an employee’s election. All shares held by the ESOP are eventually redeemable in the future for cash at the option of the holder once vesting and eligibility requirements have been met. The Company presents all shares held by the ESOP as temporary equity on the consolidated balance sheets at their redemption value. At December 31, 2018 and September 30, 2019, 78,172,809 shares and 78,138,602 shares, respectively, of the Company’s stock were held by the ESOP which the Company recorded at their aggregate redemption values of $1.9 billion and $2.6 billion, respectively.The December 31, 2018 redemption values is based on a share price established by the ESOP trustee, taking into account, among other things, the advice of a third-party valuation consultant for the ESOP trustee as well as the ESOP trustee’s knowledge of the Company. The share price valuation was determined using a combination of income and market-based methods that utilized unobservable Level 3 inputs, including significant assumptions such as forecasted revenue and operating margins, working capital requirements, and weighted average cost of capital. The September 30, 2019 redemption value is based on the Company’s closing share price in an active market and therefore has been classified as Level 1.

The following tables present a reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3) (in thousands):

Balance at December 31, 2018	$	1,876,309
Transfer to Level 1		(1,876,309	)
Balance at September 30, 2019	$	-

18. Earnings Per Share

Basic earnings per common share is computed using the weighted average number of shares outstanding during the period and income available to shareholders.

Diluted earnings per share (“EPS”) is computed similar to basic EPS, except the weighted average number of shares outstanding is increased to include the dilutive effects of outstanding stock options and other stock-based awards. There were no dilutive securities outstanding for the three and nine months ended September 28, 2018 and September 30, 2019.

The weighted average number of shares used to compute basic and diluted EPS were:

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Basic weighted average number of shares outstanding		79,185,527		99,434,877		80,702,032		89,977,493
Dilutive common share equivalents		-		-		-		-
Diluted weighted average number of shares outstanding		79,185,527		99,434,877		80,702,032		89,977,493

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19. Segment Information

The Company operates in two reportable segments: Federal Solutions and Critical Infrastructure.

The Federal Solutions segment provides advanced technical solutions to the U.S. government, delivering timely, cost-effective hardware, software and services for mission-critical projects. The segment provides advanced technologies, supporting national security missions in cybersecurity, missile defense, and military facility modernization, logistics support, hazardous material remediation and engineering services.

The Critical Infrastructure segment provides integrated engineering and management services for complex physical and digital infrastructure around the globe. The Critical Infrastructure segment is a technology innovator focused on next generation digital systems and complex structures. Industry leading capabilities in engineering and project management allow the Company to deliver significant value to customers by employing cutting-edge technologies, improving timelines and reducing costs.

The Company defines its reportable segments based on the way the chief operating decision maker (“CODM”), currently its Chairman and Chief Executive Officer, evaluates the performance of each segment and manages the operations of the Company for purposes of allocating resources among the segments. The CODM evaluates segment operating performance using segment Revenue and segment Adjusted EBITDA attributable to Parsons Corporation.

The following table summarizes business segment revenue for the periods presented (in thousands):

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Federal Solutions revenue	$	443,725	$	486,175	$	1,076,125	$	1,387,484
Critical Infrastructure revenue		532,432		537,102		1,555,443		1,529,940
Total revenue	$	976,157	$	1,023,277	$	2,631,568	$	2,917,424

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The Company defines Adjusted EBITDA attributable to Parsons Corporation as Adjusted EBITDA excluding Adjusted EBITDA attributable to noncontrolling interests. The Company defines Adjusted EBITDA as net income (loss) attributable to Parsons Corporation, adjusted to include net income (loss) attributable to noncontrolling interests and to exclude interest expense (net of interest income), provision for income taxes, depreciation and amortization and certain other items that are not considered in the evaluation of ongoing operating performance. These other items include net income (loss) attributable to noncontrolling interests, asset impairment charges, income and expense recognized on litigation matters, expenses incurred in connection with acquisitions and other non-recurring transaction costs and expenses related to our prior restructuring. The following table reconciles business segment Adjusted EBITDA attributable to Parsons Corporation to Net Income attributable to Parsons Corporation for the periods presented (in thousands):

	Three Months Ended						Nine Months Ended
Adjusted EBITDA attributable to Parsons Corporation	September 28, 2018			September 30, 2019			September 28, 2018			September 30, 2019
Federal Solutions	$	45,556		$	50,359		$	101,052		$	126,658
Critical Infrastructure		38,006			33,976			80,296			102,177
Adjusted EBITDA attributable to Parsons Corporation		83,562			84,335			181,348			228,835
Adjusted EBITDA attributable to noncontrolling interests		5,002			4,655			10,681			8,384
Depreciation and amortization		(23,599	)		(31,027	)		(46,656	)		(92,692	)
Interest expense, net		(5,589	)		(4,482	)		(12,117	)		(18,448	)
Income tax (expense) benefit		(4,154	)		15,453			(18,526	)		67,063
Litigation-related gains(a)		-			-			129,674			-
Amortization of deferred gain resulting from sale-leaseback transactions(b)		1,798			-			5,440			-
Equity-based compensation		(5,049	)		1,657			(13,198	)		(45,504	)
Transaction-related costs(c)		(2,456	)		(9,891	)		(7,511	)		(26,961	)
Restructuring(d)		-			(309	)		-			(2,880	)
Other(e)		(3,449	)		902			(3,929	)		(2,973	)
Net income including noncontrolling interests		46,066			61,293			225,206			114,824
Net income attributable to noncontrolling interests		4,844			4,481			10,316			8,012
Net income attributable to Parsons Corporation	$	41,222		$	56,812		$	214,890		$	106,812

(a) Reversal of an accrued liability, with $55.1 million recorded to revenue and $74.6 million recorded to other income (“gain associated with claim on long-term contract”) in results of operations, associated with a lawsuit against a joint venture in which the Company is the managing partner.  Please see “Note 14 – Commitments and Contingencies” in the Company’s Form S-1/A filed on April 29, 2019, for a description of this matter, which was resolved in favor of the Company on June 13, 2018.

(b) Reflects recognized deferred gains related to sales-leaseback transactions described in “Note 10 – Sale-Leasebacks.”

(c) Reflects costs incurred in connection with acquisitions, the IPO, and other non-recurring transaction costs, primarily fees paid for professional services and employee retention.

(d) Reflects costs associated with corporate restructuring initiatives.

(e) Includes a combination of gain/loss related to sale of fixed assets, software implementation costs, and other individually insignificant items that are non-recurring in nature.

Asset information by segment is not a key measure of performance used by the CODM.

The following tables presents revenues and property and equipment, net by geographic area (in thousands):

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Revenue
North America	$	805,320	$	849,839	$	2,131,562	$	2,400,124
Middle East		164,677		169,028		485,377		504,604
Rest of World		6,160		4,410		14,629		12,696
Total Revenue	$	976,157	$	1,023,277	$	2,631,568	$	2,917,424

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The geographic location of revenue is determined by the location of the customer.  The prior reporting of revenue by geographic location has been conformed to the current presentation.

	December 31, 2018		September 30, 2019
Property and Equipment, Net
North America	$	86,847	$	103,690
Middle East		5,002		5,548
Total Property and Equipment, Net	$	91,849	$	109,238

North America includes revenue in the United States for the three months ended September 28, 2018 and September 30, 2019 of $747.7 million and $774.2 million, respectively, and for the nine months ended September 28, 2018 and September 30, 2019, $2.0 billion and $2.2 billion, respectively. North America property and equipment, net includes $79.9 million and $97.3 million of property and equipment, net in the United States at December 31, 2018 and September 30, 2019, respectively.

The following table presents revenues by business lines (in thousands):

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Revenue
Cyber & Intelligence	$	68,895	$	90,429	$	177,838	$	247,710
Defense		133,259		144,160		297,318		425,603
Mission Solutions		122,780		87,936		280,902		237,914
Engineered Systems		118,791		129,989		320,067		367,542
Geospatial		-		33,661		-		108,715
Federal Solutions revenues		443,725		486,175		1,076,125		1,387,484
Connected Communities		165,529		151,779		491,444		459,277
Mobility Solutions		300,523		286,199		894,796		836,779
Industrial		66,380		99,124		169,203		233,884
Critical Infrastructure revenues		532,432		537,102		1,555,443		1,529,940
Total Revenue	$	976,157	$	1,023,277	$	2,631,568	$	2,917,424

Revenue for the three and nine months ended September 28, 2018 included $55.1 million related to the settlement of a claim that was resolved in favor of the Company in the Mobility Solutions business line of our Critical Infrastructure segment.  Please see “Note 14 – Commitments and Contingencies” in the Company’s Form S-1/A filed on April 29, 2019, for a description of this matter.  Excluding the claim settlement, revenue for the nine months ended September 28, 2018 for the Critical Infrastructure segment was$1.5 billion, respectively and for the Mobility Solutions revenue business line revenue wasand $839.7 million, respectively.

20. Subsequent Events

On October 14, 2019, the Board of Directors of the Company approved the repurchase by the Company of shares of its Common Stock pursuant to the Company’s ESOP.  The ESOP provides that, if, prior to the expiration of the lock-up period in connection with the Company’s initial public offering, the trust administering the ESOP has insufficient cash to fund all requested distributions, then, with respect to any distribution election received after the date the ESOP trustee determines it will no longer have sufficient cash to fund all requested distributions during the lock-up period, and provides at least 10 business days' written notice to the Company of such determination, the Company shall automatically, and without further action by the Company or the ESOP trustee, repurchase such number of shares of the Company's Common Stock held by the trust as is subject to any such election.  The Company repurchased approximately 157,100 shares of its Common Stock for approximately $5.4 million.  Pursuant to expiration of the lock-up period, the ESOP will commence regular distributions of shares to brokerage accounts of retired participants who have met the requirements for distribution.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis is intended to help investors understand our business, financial condition, results of operations, liquidity and capital resources. You should read this discussion together with our consolidated financial statements and related notes thereto included elsewhere in this Form 10-Q and in conjunction with the Company’s Form S-1/A filed April 29, 2019.

The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Risk Factors” and “Special Note Regarding Forward-Looking Statements” in the Company’s Form S-1/A filed April 29, 2019.  We undertake no obligation to revise publicly any forward-looking statements.  Actual results may differ materially from those contained in any forward-looking statements.

Parsons Corporation Enabling a Safer, Smarter and More Interconnected World Segments Federal Solutions Technology solutions for defense and intelligence customers Critical Infrastructure Engineering and management services for complex physical and digital infrastructure customers Financial Snapshot $2.9B Revenue for nine months ended 9/30/19 Critical Infrastructure 52% Federal Solutions 48% $3.3B Contract Awards for nine months ended 9/30/19 Critical Infrastructure 38% Federal Solutions 62% Key Facts and Figures 75 Year History ~16K Employees 5% Revenue Growth (Q3 2019) 1.2x TTM Book-to-Bill $8.3B Backlog as of  9/30/2019 Parsons 1

Parsons Corporation Enabling a Safer, Smarter and More Interconnected World Segments Federal Solutions Technology solutions for defense and intelligence customers Critical Infrastructure Engineering and management services for complex physical and digital infrastructure customers Financial Snapshot $2.9B Revenue for nine months ended 9/30/19 Critical Infrastructure 52% Federal Solutions 48% $3.3B Contract Awards for nine months ended 9/30/19 Critical Infrastructure 38% Federal Solutions 62% Key Facts and Figures 75 Year History~16K Employees 5% Revenue Growth (Q3 2019) 1.2x TTM Book-to-Bill $8.3B Backlog as of 9/30/2019

Overview

We are a leading provider of technology-driven solutions in the defense, intelligence and critical infrastructure markets. We provide solutions comprised of technical engineering services, software and hardware to address our customers’ challenges. We have developed significant expertise and differentiated capabilities in key areas of cybersecurity, intelligence, defense, military training and development, connected communities, physical infrastructure and mobility solutions. By combining our talented team of professionals and advanced technology, we help solve complex technical challenges to enable a safer, smarter and more interconnected world.

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We operate in two reporting segments, Federal Solutions and Critical Infrastructure. Our Federal Solutions business provides advanced technical solutions to the U.S. government. Our Critical Infrastructure business provides integrated engineering and management services for complex physical and digital infrastructure to state and local governments and large companies.

Our employees provide services pursuant to contracts that we are awarded by the customer and specific task orders relating to such contracts. These contracts are often multi-year, which provides us backlog and visibility on our revenues for future periods. Many of our contracts and task orders are subject to renewal and rebidding at the end of their term, and some are subject to the exercise of contract options and issuance of delivery or task orders by the applicable government entity. In addition to focusing on increasing our revenues through increased contract awards and backlog, we focus our financial performance on margin expansion and cash flow.

Key Metrics

We manage and assess the performance of our business by evaluating a variety of metrics. The following table sets forth selected key metrics (in thousands, except Book-to-Bill):

	September 28, 2018		September 30, 2019
Awards (year to date)	$	3,218,816	$	3,334,434
Backlog (1)	$	7,963,225	$	8,250,514
Book-to-Bill (year to date)		1.2		1.1

(1) Difference between our backlog of $8.3 billion and our remaining unsatisfied performance obligations, or RUPO, of $5.1 billion, each as of September 30, 2019, is due to (i) unissued delivery orders and unexercised option years, to the extent their issuance or exercise is probable, as well as (ii) contract awards, to the extent we believe contract execution and funding is probable.

Awards

Awards generally represent the amount of revenue expected to be earned in the future from funded and unfunded contract awards received during the period. Contract awards include both new and re-compete contracts and task orders. Given that new contract awards generate growth, we closely track our new awards each year.

The following table summarizes the year to date value of new awards for the periods presented below (in thousands):

	Three months ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Federal Solutions	$	671,615	$	845,559	$	1,624,573	$	2,076,928
Critical Infrastructure		552,034		289,665		1,594,243		1,257,506
Total Awards	$	1,223,649	$	1,135,224	$	3,218,816	$	3,334,434

The change in new awards from year to year in our Federal Solutions segment is primarily due to significant awards in our legacy business and from business acquisitions.  The change in new awards from year to year in our Critical Infrastructure segment is primarily due to ordinary course fluctuations.  The volume of contract awards can fluctuate in any given period due to win rate and the timing and size of the awards issued by our customers.

Backlog

We define backlog to include the following two components:

• Funded—Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on these contracts.

• Unfunded—Unfunded backlog represents the revenue value of orders for services under existing contracts for which funding has not been appropriated or otherwise authorized less revenue previously recognized on these contracts.

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Backlog includes (i) unissued delivery orders and unexercised option years, to the extent their issuance or exercise is probable, as well as (ii) contract awards, to the extent we believe contract execution and funding is probable.

The following table summarizes the value of our backlog at the respective dates presented below: (in thousands):

	September 28, 2018		September 30, 2019
Federal Solutions:
Funded	$	998,863	$	1,214,919
Unfunded		3,838,046		3,946,784
Total Federal Solutions		4,836,909		5,161,703
Critical Infrastructure:
Funded		3,126,316		3,050,525
Unfunded		-		38,286
Total Critical Infrastructure		3,126,316		3,088,811
Total Backlog (1)	$	7,963,225	$	8,250,514

(1) Difference between our backlog of $8.3 billion and our RUPO of $5.1 billion, each as of September 30, 2019, is due to (i) unissued delivery orders and unexercised option years, to the extent their issuance or exercise is probable, as well as (ii) contract awards, to the extent we believe contract execution and funding is probable.

Our backlog includes orders under contracts that in some cases extend for several years. For example, the U.S. Congress generally appropriates funds for our U.S. federal government customers on a yearly basis, even though their contracts with us may call for performance that is expected to take a number of years to complete. As a result, our federal contracts typically are only partially funded at any point during their term and all or some of the work to be performed under the contracts may remain unfunded unless and until the U.S. Congress makes subsequent appropriations and the procuring agency allocates funding to the contract.

We expect to recognize $2.8 billion of our funded backlog at September 30, 2019 as revenues in the following twelve months. However, our U.S. federal government customers may cancel their contracts with us at any time through a termination for convenience or may elect to not exercise option periods under such contracts. In the case of a termination for convenience, we would not receive anticipated future revenues, but would generally be permitted to recover all or a portion of our incurred costs and fees for work performed. See “Risk Factors—Risks Relating to Our Business—We may not realize the full value of our backlog, which may result in lower than expected revenue” in the Company’s Form S-1/A filed on April 29, 2019.

The changes in backlog in our Federal Solutions segment is primarily from business acquisitions which contributed $0.3 billion.  The change in backlog in our Critical Infrastructure segment was primarily due to ordinary course fluctuations in our business. Our backlog will fluctuate in any given period based on the volume of awards issued in comparison to the revenue generated from our existing contracts.

Book-to-Bill

Book-to-bill is the ratio of total awards to total revenue recorded in the same period. Our management believes our book-to-bill ratio is a useful indicator of our potential future revenue growth in that it measures the rate at which we are generating new awards compared to the Company’s current revenue. To drive future revenue growth, our goal is for the level of awards in a given period to exceed the revenue booked. A book-to-bill ratio greater than 1.0 indicates that awards generated in a given period exceeded the revenue recognized in the same period, while a book-to-bill ratio of less than 1.0 indicates that awards generated in such period were less than the revenue recognized in such period. The following table sets forth the book-to-bill ratio for the periods presented below:

	Three months ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Federal Solutions		1.5		1.7		1.5		1.5
Critical Infrastructure		1.0		0.5		1.0		0.8
Overall		1.3		1.1		1.2		1.1

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Factors and Trends Affecting Our Results of Operations

We believe that the financial performance of our business and our future success are dependent upon many factors, including those highlighted in this section. Our operating performance will depend upon many variables, including the success of our growth strategies and the timing and size of investments and expenditures that we choose to undertake, as well as market growth and other factors that are not within our control.

Government Spending

Changes in the relative mix of government spending and areas of spending growth, with shifts in priorities on homeland security, intelligence, defense-related programs, infrastructure and urbanization, and continued increased spending on technology and innovation, including cybersecurity, artificial intelligence, connected communities and physical infrastructure, could impact our business and results of operations. Cost-cutting and efficiency initiatives, current and future budget restrictions, spending cuts and other efforts to reduce government spending could cause our government customers to reduce or delay funding or invest appropriated funds on a less consistent basis or not at all, and demand for our solutions or services could diminish. Furthermore, any disruption in the functioning of government agencies, including as a result of government closures and shutdowns, could have a negative impact on our operations and cause us to lose revenue or incur additional costs due to, among other things, our inability to deploy our staff to customer locations or facilities as a result of such disruptions.

Federal Budget Uncertainty

There is uncertainty around the timing, extent, nature and effect of Congressional and other U.S. government actions to address budgetary constraints, caps on the discretionary budget for defense and non-defense departments and agencies, and the ability of Congress to determine how to allocate the available budget authority and pass appropriations bills to fund both U.S. government departments and agencies that are, and those that are not, subject to the caps. Additionally, budget deficits and the growing U.S. national debt increase pressure on the U.S. government to reduce federal spending across all federal agencies, with uncertainty about the size and timing of those reductions. Furthermore, delays in the completion of future U.S. government budgets could in the future delay procurement of the federal government services we provide. A reduction in the amount of, or delays, or cancellations of funding for, services that we are contracted to provide to the U.S. government as a result of any of these impacts or related initiatives, legislation or otherwise could have a material adverse effect on our business and results of operations.

Regulations

Increased audit, review, investigation and general scrutiny by government agencies of performance under government contracts and compliance with the terms of those contracts and applicable laws could affect our operating results. Negative publicity and increased scrutiny of government contractors in general, including us, relating to government expenditures for contractor services and incidents involving the mishandling of sensitive or classified information, as well as the increasingly complex requirements of the U.S. Department of Defense and the U.S. intelligence community, including those related to cybersecurity, could impact our ability to perform in the markets we serve.

Competitive Markets

The industries we operate in consist of a large number of enterprises ranging from small, niche-oriented companies to multi-billion dollar corporations that serve many government and commercial customers. We compete on the basis of our technical expertise, technological innovation, our ability to deliver cost-effective multi-faceted services in a timely manner, our reputation and relationships with our customers, qualified and/or security-clearance personnel, and pricing. We believe that we are uniquely positioned to take advantage of the markets in which we operate because of our proven track record, long-term customer relationships, technology innovation, scalable and agile business offerings and world class talent. Our ability to effectively deliver on project engagements and successfully assist our customers affects our ability to win new contracts and drives our financial performance.

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Acquired Operations

Polaris Alpha

On May 31, 2018, the Company acquired Polaris Alpha for $489.1 million. Polaris Alpha is an advanced, technology-focused provider of innovative mission solutions for national security, intelligence and other U.S. federal customers. The acquisition was funded by cash on-hand and borrowings under our Revolving Credit Facility. The financial results of Polaris Alpha have been included in our consolidated results of operations from May 31, 2018 onward.

OGSystems

On January 7, 2019, the Company acquired OGSystems for $292.4 million. OGSystems provides geospatial intelligence, big data analytics and threat mitigation for defense and intelligence customers. The acquisition was funded by cash on-hand and borrowings under our Term Loan and Revolving Credit Facility. The financial results of OGSystems have been included in our consolidated results of operations from January 7, 2019 onward.

QRC Technologies

On July 31, 2019, the Company acquired QRC Technologies for $214.1 million.  QRC Technologies provides design and development of open-architecture radio-frequency products.  The acquisition was funded by cash on-hand and borrowings under our Revolving Credit Facility.  The financial results of QRC Technologies have been included in our consolidated results of operations from July 31, 2019 onward.

Seasonality

Our results may be affected by variances as a result of seasonality we experience across our businesses. This pattern is typically driven by the U.S. federal government fiscal year-end, September 30. While not certain, it is not uncommon for U.S. government agencies to award extra tasks or complete other contract actions in the weeks before the end of the U.S. federal government fiscal year in order to avoid the loss of unexpended fiscal year funds. In addition, we have also historically experienced higher bid and proposal costs in the months leading up to the U.S. federal government fiscal year-end as we pursue new contract opportunities expected to be awarded early in the following U.S. federal government fiscal year as a result of funding appropriated for that U.S. federal government fiscal year. Furthermore, many U.S. state governments with fiscal years ending on June 30 tend to accelerate spending during their first quarter, when new funding becomes available. We may continue to experience this seasonality in future periods, and our results of operations may be affected by it.

Taxes

Historically, the Company had elected to be taxed under the provisions of Subchapter “S” of the Internal Revenue Code for federal tax purposes. As a result, the Company’s income had not been subject to U.S. federal income taxes or state income taxes in those states where the “S” Corporation status was recognized. No provision or liability for federal or state income tax had been provided in the Company’s consolidated financial statements except for those states where the “S” Corporation status was not recognized and for the 1.5% California franchise tax to which the Company was also subject as a California “S” Corporation. The provision for income tax in the historical periods prior to the initial public offering (“IPO”) consists of these taxes.

In connection with the IPO on May 8, 2019, the Company’s “S” Corporation status terminated and the Company will be treated as a “C” Corporation under Subchapter C of the Internal Revenue Code. The revocation of the Company’s “S” Corporation election had a material impact on the Company’s results of operations, financial condition and cash flows. Going forward the effective income tax rate will increase and net income will decrease since the Company will be subject to both U.S. federal and state taxes on our earnings.

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Results of Operations

In October 2018, our board of directors approved a change in our annual and quarterly fiscal period ends from the last Friday on or before the calendar year or quarterly month-end to the last day of the calendar year or quarterly month-end. Accordingly, the period end for the first, second, and third quarters of fiscal 2018 and fiscal 2019 are March 30, 2018, June 29, 2018, and September 28, 2018, respectively, and March 31, 2019, June 30, 2019, and September 30, 2019, respectively.  The number of days in the three and nine month periods ended September 28, 2018 and September 30, 2019 were 91 and 273, respectively, and 92 and 273, respectively.

Revenue

Our revenue consists of both services provided by our employees and pass-through fees from subcontractors and other direct costs. Our Federal Solutions segment derives revenue primarily from the U.S. federal government and our Critical Infrastructure segment derives revenue primarily from government and commercial customers.

We recognize revenue for work performed under cost-plus, time-and-materials and fixed-price contracts, as follows:

Under cost-plus contracts, we are reimbursed for allowable or otherwise defined costs incurred, plus a fee. The contracts may also include incentives for various performance criteria, including quality, timeliness, safety and cost-effectiveness. In addition, costs are generally subject to review by clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract. Revenue for cost-plus contracts is generally recognized using the cost-to-cost measure of progress method. Accounting for the sales and profits on performance obligations for which progress is measured using the cost-to-cost method involves the preparation of estimates of: (1) transaction price and (2) total costs at completion, which is equal to the sum of the actual incurred costs to date on the contract and the estimated costs to complete the contract’s statement of work.

Under time-and-materials contracts, hourly billing rates are negotiated and charged to clients based on the actual time spent on a project. In addition, clients reimburse actual out-of-pocket costs for other direct costs and expenses that are incurred in connection with the performance under the contract. Revenue on time-and-materials contracts is recognized as services are performed and are contractually billable.

Under fixed-price, or FFP contracts, clients pay an agreed fixed-amount negotiated in advance for a specified scope of work. Revenue on FFP contracts is generally recognized using the cost-to-cost measure of progress method.

Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” and “Note 2—Summary of Significant Accounting Polices” in the notes to our consolidated financial statements included in the Company’s Form S-1/A filed on April 29, 2019 for a further description of our policies on revenue recognition.

The table below presents the percentage of total revenue for each type of contract.

	Three Months Ended		Nine Months Ended
	September 28, 2018	September 30, 2019	September 28, 2018	September 30, 2019
Fixed-price	30.8%	28.2%	31.7%	29.2%
Time-and-materials	26.1%	27.9%	27.8%	27.8%
Cost-plus	43.2%	43.9%	40.5%	43.1%

The amount of risk and potential reward varies under each type of contract. Under cost-plus contracts, there is limited financial risk, because we are reimbursed for all allowable costs up to a ceiling. However, profit margins on this type of contract tend to be lower than on time-and-materials and fixed-price contracts. Under time-and-materials contracts, we are reimbursed for the hours worked using the predetermined hourly rates for each labor category. In addition, we are typically reimbursed for other direct contract costs and expenses at cost. We assume financial risk on time-and-materials contracts because our labor costs may exceed the negotiated billing rates. Profit margins on well-managed time-and-materials contracts tend to be higher than profit margins on cost-plus contracts as long as we are able to staff those contracts with people who have an appropriate skill set. Under fixed-price contracts, we are required to deliver the objectives under the contract for a pre-determined price. Compared to time-and-materials and cost-plus contracts, fixed-price contracts generally offer higher profit margin opportunities because we receive the full benefit of any cost savings, but they also generally involve greater financial risk because we bear the risk of any cost overruns. In the aggregate, the contract type mix in our revenue for any given period will affect that period’s profitability.

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Our recognition of profit on long-term contracts requires the use of assumptions related to transaction price and total cost of completion. Estimates are continually evaluated as work progresses and are revised when necessary. When a change in estimate is determined to have an impact on contract profit, we record a positive or negative adjustment to revenue and/or direct cost of contracts.

Joint Ventures

We conduct a portion of our business through joint ventures or similar partnership arrangements. For the joint ventures we control, we consolidate all the revenues and expenses in the Company’s consolidated statements of income (including revenues and expenses attributable to noncontrolling interests). For the joint ventures we do not control, we recognize equity in earnings (loss) of unconsolidated joint ventures. Our revenues included amounts related to services we provided to our unconsolidated joint ventures for three months ended September 28, 2018 and September 30, 2019, of $36.6 million and $28.8 million, respectively, and for the nine months ended September 28, 2018 and September 30, 2019, $112.2 million and $113.1 million, respectively.

Operating costs and expenses

Operating costs and expenses primarily include direct costs of contracts and indirect, general and administrative expenses. Costs associated with compensation-related expenses for our people and facilities, which includes ESOP contribution expenses, are the most significant component of our operating expenses. Total ESOP contribution expense for the three months ended September 28, 2018 and September 30, 2019 was $11.4 million and $12.3 million, respectively, and for the nine months ended September 28, 2018 and September 30, 2019 was $34.1 million and $36.8 million, respectively, and is recorded in “Direct cost of contracts” and “Indirect, general and administrative expenses.” We expect operating expenses to increase due to our anticipated growth and the incremental costs associated with being a public company. In particular, under our existing compensation plans, we will adjust our compensation expense on a quarterly basis for any change in our share price from the end of the prior quarter. However, on a forward-looking basis, we generally expect these costs to decline as a percentage of our total revenue as we realize the benefits of scale.

Direct costs of contracts consist of direct labor and associated fringe benefits, indirect overhead, subcontractor costs, travel expenses and other expenses incurred to perform on contracts.

Indirect, general and administrative expenses include salaries and wages and fringe benefits of our employees not performing work directly for customers, facility costs and other costs related to these indirect functions.

Other income and expenses

Other income and expenses primarily consist of interest income, interest expense, other income, net and interest and other expense associated with claims on long-term contracts.

Interest income primarily consists of interest earned on U.S. government money market funds.

Interest expense consists of interest expense incurred under our Senior Notes and Credit Agreement.

Other income, net primarily consists of gain or loss on sale of assets, sublease income and transaction gain or loss related to movements in foreign currency exchange rates.

Adjusted EBITDA

The following table sets forth Adjusted EBITDA, Net Income Margin, and Adjusted EBITDA Margin for the three and nine months ended September 28, 2018 and September 30, 2019.

	Three Months Ended						Nine Months Ended
(U.S. dollars in thousands)	September 28, 2018			September 30, 2019			September 28, 2018			September 30, 2019
Adjusted EBITDA (1)	$	88,564		$	88,990		$	192,029		$	237,219
Net Income Margin (2)		4.7	%		6.0	%		8.6	%		3.9	%
Adjusted EBITDA Margin (3)		9.1	%		8.7	%		7.3	%		8.1	%

(1) A reconciliation of net income attributable to Parsons Corporation to Adjusted EBITDA is set forth below (in thousands).

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(2) Net Income Margin is calculated as net income including noncontrolling interest divided by revenue in the applicable period

(3) Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by revenue in the applicable period.

	Three Months Ended						Nine Months Ended
	September 28, 2018			September 30, 2019			September 28, 2018			September 30, 2019
Net income attributable to Parsons Corporation	$	41,222		$	56,812		$	214,890		$	106,812
Interest expense, net		5,589			4,482			12,117			18,448
Income tax provision (benefit)		4,154			(15,453	)		18,526			(67,063	)
Depreciation and amortization		23,599			31,027			46,656			92,692
Net income attributable to noncontrolling interests		4,844			4,481			10,316			8,012
Litigation-related gains(a)		-			-			(129,674	)		-
Amortization of deferred gain resulting from sale-leaseback transactions(b)		(1,798	)		-			(5,440	)		-
Equity-based compensation		5,049			(1,657	)		13,198			45,504
Transaction-related costs(c)		2,456			9,891			7,511			26,961
Restructuring(d)		-			309			-			2,880
Other(e)		3,449			(902	)		3,929			2,973
Adjusted EBITDA	$	88,564		$	88,990		$	192,029		$	237,219

(a) Reversal of an accrued liability, with $55.1 million recorded to revenue and $74.6 million recorded to other income (“gain associated with claim on long-term contract”) in our results of operations, associated with a lawsuit against a joint venture in which the Company is the managing partner.  Please see “Note 14 – Commitments and Contingencies” in the Company’s Form S-1/A filed on April 29, 2019, for a description of this matter, which was resolved in favor of the Company on June 13, 2018.

(b) Reflects recognized deferred gains related to sales-leaseback transactions described in “Note 10- Sale-Leasebacks.”

(c) Reflects costs incurred in connection with acquisitions, IPO, and other non-recurring transaction costs, primarily fees paid for professional services and employee retention.

(d) Reflects costs associated with our corporate restructuring initiatives.

(e) Includes a combination of gain/loss related to sale of fixed assets, software implementation costs, and other individually insignificant items that are non-recurring in nature.

Adjusted EBITDA is a supplemental measure of our operating performance used by management and our board of directors to assess our financial performance both on a segment and on a consolidated basis. We discuss Adjusted EBITDA because our management uses this measure for business planning purposes, including to manage the business against internal projected results of operations and measure the performance of the business generally. Adjusted EBITDA is frequently used by analysts, investors and other interested parties to evaluate companies in our industry.

Adjusted EBITDA is not a GAAP measure of our financial performance or liquidity and should not be considered as an alternative to net income (loss) as a measure of financial performance or cash flows from operations as measures of liquidity, or any other performance measure derived in accordance with GAAP. We define Adjusted EBITDA as net income (loss) attributable to Parsons Corporation, adjusted to include net income (loss) attributable to noncontrolling interests and to exclude interest expense (net of interest income), provision for income taxes, depreciation and amortization and certain other items that we do not consider in our evaluation of ongoing operating performance. These other items include, among other things, impairment of goodwill, intangible and other assets, interest and other expenses recognized on litigation matters, amortization of deferred gain resulting from sale-leaseback transactions, expenses incurred in connection with acquisitions and other non-recurring transaction costs and expenses related to our corporate restructuring initiatives. Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect tax payments, debt service requirements, capital expenditures and certain other cash costs that may recur in the future, including, among other things, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. Management compensates for these limitations by relying on our GAAP results in addition to using Adjusted EBITDA supplementally. Our measure of Adjusted EBITDA is not necessarily comparable to similarly titled captions of other companies due to different methods of calculation.

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The following table shows Adjusted EBITDA attributable to Parsons Corporation for each of our reportable segments and Adjusted EBITDA attributable to noncontrolling interests (in thousands):

	Three Months Ended				Variance						Nine Months Ended				Variance
	September 28, 2018		September 30, 2019		Dollar			Percent			September 28, 2018		September 30, 2019		Dollar			Percent
Federal Solutions Adjusted EBITDA attributable to Parsons Corporation	$	45,556	$	50,359	$	4,803			10.5	%	$	101,052	$	126,658	$	25,606			25.3	%
Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation		38,006		33,976		(4,030	)		-10.6	%		80,296		102,177		21,881			27.3	%
Adjusted EBITDA attributable to noncontrolling interests		5,002		4,655		(347	)		-6.9	%		10,681		8,384		(2,297	)		-21.5	%
Total Adjusted EBITDA	$	88,564	$	88,990	$	426			0.5	%	$	192,029	$	237,219	$	45,190			23.5	%

The following table sets forth our results of operations for the three and nine months ended September 28, 2018 and September 30, 2019 as a percentage of revenue.

	Three Months Ended						Nine Months Ended
	September 28, 2018			September 30, 2019			September 28, 2018			September 30, 2019
Revenues		100	%		100	%		100	%		100	%
Direct costs of contracts		80.2	%		78.0	%		78.1	%		78.8	%
Equity in earnings of unconsolidated joint ventures		1.3	%		0.7	%		1.0	%		1.0	%
Indirect, general and administrative expenses		15.4	%		17.4	%		16.0	%		19.9	%
Operating income		5.6	%		5.2	%		6.9	%		2.3	%
Interest income		0.0	%		0.0	%		0.1	%		0.0	%
Interest expense		-0.6	%		-0.5	%		-0.6	%		-0.7	%
Other income, net		0.1	%		-0.3	%		0.0	%		-0.1	%
(Interest and other expense) gain associated with claim on long-term contract		0.0	%		0.0	%		2.8	%		0.0	%
Total other income (expense)		-0.5	%		-0.7	%		2.4	%		-0.7	%
Income before income tax provision		5.1	%		4.5	%		9.3	%		1.6	%
Income tax benefit (provision)		-0.4	%		1.5	%		-0.7	%		2.3	%
Net income including noncontrolling interests		4.7	%		6.0	%		8.6	%		3.9	%
Net income attributable to noncontrolling interests		-0.5	%		-0.4	%		-0.4	%		-0.3	%
Net income attributable to Parsons Corporation		4.2	%		5.6	%		8.2	%		3.7	%

Revenue

	Three Months Ended				Variance					Nine Months Ended				Variance
(U.S. dollars in thousands)	September 28, 2018		September 30, 2019		Dollar		Percent			September 28, 2018		September 30, 2019		Dollar		Percent
Revenue	$	976,157	$	1,023,277	$	47,120		4.8	%	$	2,631,568	$	2,917,424	$	285,856		10.9	%

enue In millions $3,000 $2,900 $2,800 $2,700 $2,600 $2,500 $2,400 $2,300 $2,200 $2,100 $2,000 $2,576 $64 $277 $2,917 YTD 2018 - Excluding Claim Settlement Organic Acquisitions YTD 2019 $ In millions

Revenue increased $47.1 million for the three months ended September 30, 2019 when compared to the corresponding period last year, primarily due to an increase in revenue in our Federal Solutions segment of $42.5 million and an increase in our Critical Infrastructure segment of $4.7 million.  

Revenue for the nine months ended September 28, 2018 included $55.1 million related to the settlement of a claim that was resolved in favor of the Company on June 13, 2018, in our Critical Infrastructure segment.  Please see “Note 14 – Commitments and Contingencies” in the Company’s Form S-1/A filed on April 29, 2019, for a description of this matter.  Excluding the claim settlement, revenue increased $341.0 million for the nine months ended September 30, 2019 when compared to the corresponding period last year, primarily due to an increase in revenue in our Federal Solutions segment of $311.4 million and an increase in our Critical Infrastructure segment of $29.6 million See “—Segment Results” below for further discussion.

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Direct costs of contracts

	Three Months Ended				Variance					Nine Months Ended				Variance
(U.S. dollars in thousands)	September 28, 2018		September 30, 2019		Dollar		Percent			September 28, 2018		September 30, 2019		Dollar		Percent
Direct costs of contracts	$	783,018	$	798,552	$	15,534		2.0	%	$	2,054,201	$	2,297,512	$	243,311		11.8	%

Direct cost of contracts increased for the three months ended September 30, 2019 when compared to the corresponding period last year primarily due to an increase of $18.5 million in our Federal Solutions segment offset by a decrease of $3.0 million in our Critical Infrastructure segment. The increase in our Federal Solutions segment was due primarily to business acquisitions, which added $27.4 million, and was primarily offset by a decrease in pass-through sub-contractor and material costs. The decrease in our Critical Infrastructure segment was primarily due to a decrease in pass-through sub-contractor and material costs. Direct cost of contracts increased for the nine months ended September 30, 2019 when compared to the corresponding period last year, primarily due to an increase of $221.8 million in our Federal Solutions segment and from an increase of $21.5 million in our Critical Infrastructure segment. The increase in our Federal Solutions segment was due primarily to business acquisitions, which added $207.8 million. The increase in our Critical Infrastructure segment was primarily due to an increase in business volume under existing contracts.  

Equity in earnings of unconsolidated joint ventures

	Three Months Ended				Variance						Nine Months Ended				Variance
(U.S. dollars in thousands)	September 28, 2018		September 30, 2019		Dollar			Percent			September 28, 2018		September 30, 2019		Dollar		Percent
Equity in earnings of unconsolidated joint ventures	$	12,707	$	7,274	$	(5,433	)		-42.8	%	$	25,577	$	29,305	$	3,728		14.6	%

Equity in earnings of unconsolidated joint ventures decreased for the three months ended September 30, 2019 when compared to the corresponding period last year.  The decrease is primarily related to the substantial completion of a significant joint venture.  For the nine months ended September 30, 2019, equity in earnings of unconsolidated joint ventures increased when compared to the corresponding periods last year.  The increase was primarily due to increased activity under a number of the Company’s existing joint ventures, offset by the substantial completion of a significant joint venture during the quarter.

Indirect, general and administrative expenses

	Three Months Ended				Variance					Nine Months Ended				Variance
(U.S. dollars in thousands)	September 28, 2018		September 30, 2019		Dollar		Percent			September 28, 2018		September 30, 2019		Dollar		Percent
Indirect, general and administrative expenses	$	150,733	$	178,550	$	27,817		18.5	%	$	422,028	$	581,428	$	159,400		37.8	%

Indirect, general and administrative expenses (“IG&A”) for the three months ended September 28, 2018 and September 30, 2019 includes, $5.0 million and $(1.7) million, respectively, and for the nine months ended September 28, 2018 and September 30, 2019, $13.2 million and $45.5 million, respectively, of compensation cost related to equity-based awards that settle in cash.  These awards are remeasured to an updated fair value at each reporting period until the award is settled.  Compensation cost is trued-up at each reporting period for changes in fair value pro-rated for the portion of the requisite service period rendered.

The significant increase in compensation cost related to these cash settled equity-based awards for the nine months ended September 30, 2019 is due to the significant difference in the fair value of a share of the Company’s common stock under Parsons ESOP valuation at March 31, 2019 compared to the fair value of a share of the Company’s common stock in the public market at September 30, 2019. Please see “Note 17 – Fair Value of Financial Instruments” for a description of how the ESOP share value is determined.  Please see “Note 1 – Description of Operations” for more detail regarding the Company’s IPO.  The plans in which these awards were granted have been frozen and the Company does not currently intend to grant any further cash settled equity-based awards.  

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Excluding the compensation costs discussed above, IG&A for the three months ended September 28, 2018 and September 30, 2019was$145.7 million and $180.2 million, respectively, and for the nine months ended September 28, 2018 and September 30, 2019 was$408.8 million and $535.9 million, respectively.

The increase in IG&A of $34.5 million for the three months ended September 30, 2019 when compared to the corresponding period last year was primarily due to our Federal Solutions segment, most of which is related to additional expenses of $6.9 million from business acquisitions, $7.6 million from the amortization of intangible assets related to our acquisitions, and $5.9 million in acquisition-related expenses, the remaining increase of $11.6 million is related to additional bid and proposal costs and a greater allocation of corporate IG&A in line with the growing share of overall business. In our Critical Infrastructure segment, IG&A increased by $2.5 million.

The increase in IG&A of $127.1 million for the nine months ended September 30, 2019 when compared to the corresponding period last year was primarily due to our Federal Solutions segment, most of which is related to additional expenses of $41.6 million from business acquisitions, $42.3 million from the amortization of intangible assets related to our acquisitions and $11.1 million in acquisition-related expenses, the remaining increase of $29.5 million is related to additional bid and proposal costs and a greater allocation of corporate IG&A in line with the growing share of overall business. In our Critical Infrastructure segment, IG&A increased by $2.6 million.

Total other income (expense)

	Three Months Ended						Variance						Nine Months Ended						Variance
(U.S. dollars in thousands)	September 28, 2018			September 30, 2019			Dollar			Percent			September 28, 2018			September 30, 2019			Dollar			Percent
Interest income	$	351		$	427		$	76			21.7	%	$	2,358		$	1,129		$	(1,229	)		-52.1	%
Interest expense		(5,940	)		(4,909	)		1,031			-17.4	%		(14,475	)		(19,577	)		(5,102	)		35.2	%
Other income (expense), net		696			(3,127	)		(3,823	)		-549.3	%		355			(1,580	)		(1,935	)		-545.1	%
Gain associated with claim on long-term contract		-			-			-			-			74,578			-			(74,578	)		-100.0	%
Total other income (expense)	$	(4,893	)	$	(7,609	)	$	(2,716	)		55.5	%	$	62,816		$	(20,028	)	$	(82,844	)		-131.9	%

Interest income is related to interest earned on cash balances held.  Interest expense is primarily due to debt related to our business acquisitions.  During the nine months ended September 30, 2019, the Company’s term loan of $150 million was paid off and the amount of debt outstanding under the Company’s revolving credit facility was reduced.  The amounts in other income (expense), net are primarily related to transaction gains and losses on foreign currency transactions and sublease income.

The amount presented in gain associated with claim on long-term contract for the nine months ended September 28, 2018 relates to a lawsuit against a joint venture in which the Company is the managing partner.  Please see “Note 14 – Commitments and Contingencies” in the Company’s Form S-1/A filed on April 29, 2019, for a description of this matter, which was resolved in favor of the Company on June 13, 2018.

Income tax expense (benefit)

	Three Months Ended					Variance						Nine Months Ended					Variance
(U.S. dollars in thousands)	September 28, 2018		September 30, 2019			Dollar			Percent			September 28, 2018		September 30, 2019			Dollar			Percent
Income tax expense (benefit)	$	4,154	$	(15,453	)	$	(19,607	)		-472.0	%	$	18,526	$	(67,063	)	$	(85,589	)		-462.0	%

Income tax benefit was recorded for the three and nine months ended September 30, 2019, compared to expense for the corresponding periods last year primarily due to revaluation of our deferred tax assets and liabilities as a result of our conversion from “S” Corporation to a “C” Corporation.

As described in “Note 12 – Income Taxes,” in connection with the Company’s IPO on May 8, 2019, the Company converted from an “S” Corporation to a “C” Corporation. On a pro forma basis, if the Company had been taxed as a “C” Corporation for the three months ended September 28, 2018 and September 30, 2019, the pro forma effective income tax

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rate would have been 29.25% and 35.14%, respectively, and the pro forma income tax would have been $14.7 million and $16.1 million, respectively. For the nine months ended September 28, 2018 and September 30, 2019, the pro forma effective income tax rate would have been 28.46% and 41.40%, respectively, and the Company’s pro forma income tax expense would have been $69.4 million and $19.8 million, respectively. The most significant item contributing to the change in the effective tax rate relates to a change in jurisdictional earnings.  The difference between the statutory U.S. federal income tax rate of 21.0% and the effective tax rate for the quarter ended September 28, 2018 primarily relates to foreign earnings which are subject to foreign income taxes at rates that exceed the U.S. income tax rate.

The termination of the “S” Corporation status was treated as a change in tax status for Accounting Standards Codification 740, Income Taxes. These rules require that the deferred tax effects of a change in tax status to be recorded to income from continuing operations on the date the “S” Corporation status terminates. During the quarter ended June 30, 2019, the Company recorded a deferred tax benefit of $56 million for the estimated effect of the change in tax status, relating to the recognition of net deferred tax assets for temporary differences in existence on the date of conversion to a “C” Corporation. During the quarter ended September 30, 2019, the Company updated the estimate to $85 million, representing an increase in expected benefit of $29 million. The update primarily relates to a change in the forecasted temporary differences as of the conversion, changes in deferred tax assets resulting from 2018 tax return-to-provision adjustments, and changes in tax accounting methods that were made with the 2018 tax return during the third quarter. This estimated amount is subject to additional revision based upon actual results for the current year.

Segment Results

We evaluate segment operating performance using segment revenue and segment Adjusted EBITDA attributable to Parsons Corporation. Adjusted EBITDA attributable to Parsons Corporation is Adjusted EBITDA excluding Adjusted EBITDA attributable to noncontrolling interests. Presented above, inthis Management’s Discussion and Analysis of Financial Condition and Results of Operations, is a discussion of our definition of Adjusted EBITDA, how we use this metric, why we present this metric and the material limitations on the usefulness of this metric. See “Note 19—Segments Information” in the notes to the consolidated financial statements in this Form 10-Q for further discussion regarding our segment Adjusted EBITDA attributable to Parsons Corporation.

The following table shows Adjusted EBITDA attributable to Parsons Corporation for each of our reportable segments and Adjusted EBITDA attributable to noncontrolling interests:

	Three Months Ended				Nine Months Ended
(U.S. dollars in thousands)	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Federal Solutions Adjusted EBITDA attributable to Parsons Corporation	$	45,556	$	50,359	$	101,052	$	126,658
Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation		38,006		33,976		80,296		102,177
Adjusted EBITDA attributable to noncontrolling interests		5,002		4,655		10,681		8,384
Total Adjusted EBITDA	$	88,564	$	88,990	$	192,029	$	237,219

Federal Solutions

	Three Months Ended				Variance					Nine Months Ended				Variance
(U.S. dollars in thousands)	September 28, 2018		September 30, 2019		Dollar		Percent			September 28, 2018		September 30, 2019		Dollar		Percent
Revenue	$	443,725	$	486,175	$	42,450		9.6	%	$	1,076,125	$	1,387,484	$	311,359		28.9	%
Adjusted EBITDA attributable to Parsons Corporation	$	45,556	$	50,359	$	4,803		10.5	%	$	101,052	$	126,658	$	25,606		25.3	%

The increase in Federal Solutions revenue for the three months ended September 30, 2019 compared to the corresponding period last year was primarily due to incremental revenue from business acquisitions, which added $39.3 million.  Revenue for the third quarter of 2018 was impact by approximately $20 million of unusually high volume on two contracts and revenue for the third quarter of 2019 included a significant incentive fee recognition.  Federal Solutions organic revenue grew $3.2 million for the three months ended September 30, 2019 compared to the corresponding period last year.

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The increase in Federal Solutions revenue for the nine months ended September 30, 2019 compared to the corresponding period last year was primarily due to business acquisitions, which added $277.1 million.  Federal Solutions organic revenue grew $34.3 million, which included significant incentive fee recognition.

djusted EBITDA In millions $ In millions $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 $101 $20 $69 -$23 -$42 $2 $27 YTD 2018 Project Margin – Organic Project Margin – Acquisitions IG&A –
Organic IG&A – Acquisitions Other YTD 2019

The increase in Federal Solutions Adjusted EBITDA attributable to Parsons Corporation for the three months ended September 30, 2019 compared to the corresponding period last year was primarily due to business acquisitions, and generally higher profit margins driven by significant incentive fee recognition.  These increases were primarily offset by an increase in IG&A, driven by an increase in bid and proposal costs and a greater allocation of corporate IG&A in line with the segment’s growing share of overall business.  

The increase in Federal Solutions Adjusted EBITDA attributable to Parsons Corporation for the nine months ended September 30, 2019 compared to the corresponding period last year was primarily due to business acquisitions and generally higher profit margins driven by significant incentive fee recognition.  These increases were primarily offset by an increase in IG&A as described above.  

Critical Infrastructure

	Three Months Ended				Variance						Nine Months Ended				Variance
(U.S. dollars in thousands)	September 28, 2018		September 30, 2019		Dollar			Percent			September 28, 2018		September 30, 2019		Dollar			Percent
Revenue	$	532,432	$	537,102	$	4,670			0.9	%	$	1,555,443	$	1,529,940	$	(25,503	)		-1.6	%
Adjusted EBITDA attributable to Parsons Corporation	$	38,006	$	33,976	$	(4,030	)		-10.6	%	$	80,296	$	102,177	$	21,881			27.3	%

Revenue for the three months ended September 30, 2019 compared to the corresponding period last year increased $4.7 million.  As discussed above, revenue for the nine months ended September 28, 2018 included $55.1 million related to the settlement of a claim that was resolved in favor of the Company.  Excluding the claim settlement, revenue for the nine months ended September 30, 2019 compared to the corresponding periods last year increased $29.6 million.  This increase in revenue was primarily related to revenue growth on existing contracts.

The decrease in Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation for the three months ended September 30, 2019 compared to the corresponding period last year was primarily due to the substantial completion of a significant joint venture and an increase in IG&A.  These decreases were partially offset by an increase in project margins from higher margin new awards.  

The increase in Adjusted EBITDA attributable to Parsons for the nine months ended September 30, 2019 compared to the corresponding period last year was primarily due to an increase in equity in earnings of unconsolidated joint ventures, a decrease in IG&A and an increase in business volume.

Liquidity and Capital Resources

Historically, we have financed our operations and capital expenditures and satisfied redemptions of ESOP interests through a combination of internally generated cash from operations, our Senior Notes and from borrowings under our Revolving Credit Facility.

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Generally, cash provided by operating activities has been adequate to fund our operations. Due to fluctuations in our cash flows and growth in our operations, it may be necessary from time to time in the future to borrow under our Credit Agreement to meet cash demands. Our management regularly monitors certain liquidity measures to monitor performance. We calculate our available liquidity as a sum of cash and cash equivalents from our consolidated balance sheet plus the amount available and unutilized on our Credit Agreement.

We believe we have adequate liquidity and capital resources to fund our operations, support our debt service and support our ongoing acquisition strategy for at least the next twelve months based on the liquidity from cash provided by our operating activities, cash and cash equivalents on hand and our borrowing capacity under our Revolving Credit Facility.

Cash Flows

Cash received from customers, either from the payment of invoices for work performed or for advances in excess of revenue recognized, is our primary source of cash. We generally do not begin work on contracts until funding is appropriated by the customers. Billing timetables and payment terms on our contracts vary based on a number of factors, including whether the contract type is cost-plus, time-and-materials, or fixed-price contracts. We generally bill and collect cash more frequently under cost-plus and time-and-materials contracts, as we are authorized to bill as the costs are incurred or work is performed. In contrast, we may be limited to bill certain fixed-price contracts only when specified milestones, including deliveries, are achieved. A number of our contracts may provide for performance-based payments, which allow us to bill and collect cash prior to completing the work.

Accounts receivable is the principal component of our working capital and is generally driven by revenue growth. Accounts receivable reflects amounts billed to our clients as of each balance sheet date and receivable amounts that are currently due but unbilled. The total amount of our accounts receivable can vary significantly over time, but is generally sensitive to revenue levels. Net days sales outstanding, which we refer to as net DSO, is calculated by dividing (i) (accounts receivable plus contract assets) less (contract liabilities plus accounts payable) by (ii) average revenue per day (calculated by dividing trailing twelve months revenue by the number of days in that period). In the last few years we have focused on collecting outstanding receivables to reduce Net DSO and working capital. Net DSO was 67 days at September 28, 2018 and 58 days at September 30, 2019. Our working capital (current assets less current liabilities) was $482.6 million at December 31, 2018 and $318.0 million at September 30, 2019.

Our cash, cash equivalents and restricted cash decreased by $134.7 million to $146.5 million at September 30, 2019 from $281.2 million at December 31, 2018.

The following table summarizes our sources and uses of cash over the periods presented (in thousands):

	Nine Months Ended
	September 28, 2018			September 30, 2019
Net cash provided by operating activities	$	99,822		$	130,628
Net cash used in investing activities		(503,637	)		(541,710	)
Net cash provided by financing activities		173,134			277,302
Effect of exchange rate changes		(1,233	)		(953	)
Net decrease in cash and cash equivalents	$	(231,914	)	$	(134,733	)

Operating Activities

Net cash provided by operating activities consists primarily of net income (loss) adjusted for noncash items, such as: equity in earnings (loss) of unconsolidated joint ventures, contributions of treasury stock, depreciation and amortization of property and equipment and intangible assets, provisions for doubtful accounts, amortization of deferred gains, and impairment charges. The timing between the conversion of our billed and unbilled receivables into cash from our customers and disbursements to our employees and vendors is the primary driver of changes in our working capital. Our operating cash flows are primarily affected by our ability to invoice and collect from our clients in a timely manner, our ability to manage our vendor payments and the overall profitability of our contracts.

44

Net cash provided by operating activities increased $30.8 millionto $130.6 millionfor the nine months ended September 30, 2019 compared to $99.8 millionof cash provided by operating activities for the nine months ended September 28, 2018. The increase in net cash provided by operating activities is primarily froma $65.7 million increase in cash flows from our working capital accounts offset by a$35.5 million decrease in net income after adjusting for non-cash items. Net DSOs improved from 67 days to 58 days primarily driven by the increase in the Company’s revenue from business acquisitions along with net receivables decreasing.

Investing Activities

Net cash used in investing activities consists primarily of cash flows associated with capital expenditures and business acquisitions.

Net cash used in investing activities decreased $38.1 million to $541.7 million for the nine months ended September 30, 2019, when compared to $503.6 million for the nine months ended September 28, 2018.  Cash used in investing activities for the nine months ended September 28, 2018 primarily related to the acquisition of Polaris Alpha and for the nine months ended September 30, 2019 primarily related to the acquisitions of OGSystems and QRC Technologies.

Financing Activities

Net cash provided by financing activities is primarily associated with proceeds from debt, the repayment thereof, distributions to noncontrolling interests and payments to the ESOP in connection with the redemption of ESOP participants’ interests. We spent $73.3 million and $0.8 million for the nine months ended September 28, 2018 and September 30, 2019, respectively, in connection with the redemption of ESOP participants’ interests. With a public market for the Company’s common stock, cash is no longer required for ESOP redemptions following the 180-day lock-up period which ended November 3, 2019.

Net cash provided by financing activities increased $104.2 million to $277.3 million for the nine months ended September 30, 2019 when compared to $173.1 million for the nine months ended September 28, 2018, primarily due to $536.9 million of net proceeds from the IPO and a reduction of $72.5 million in the purchases of treasury stock.  These changes in cash flows provided by financing activities were offset, in part, by a net change in repayments under the Company’s revolving credit agreement of $420.0 million, payment of the IPO dividend of $52.1 million, and an increase of $28.5 million in distributions to noncontrolling interests.

Letters of Credit

We also have in place several secondary bank credit lines for issuing letters of credit, principally for foreign contracts, to support performance and completion guarantees. Letters of credit commitments outstanding under these bank lines aggregated $220.6 million as of September 30, 2019, including $45.2 million of letters of credit outstanding under the Credit Agreement.

Recent Accounting Pronouncements

See the information set forth in “Note 3—Summary of Significant Accounting Policies—Recently Adopted Accounting Pronouncements” in the notes to our consolidated financial statements.

Off-Balance Sheet Arrangements

As of September 30, 2019, we have no off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

45

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

We are exposed to interest rate risks related to the Company’s Revolving Credit Facility. As of September 30, 2019, we had no amounts outstanding under the Revolving Credit Facility.  Borrowings under the Credit Facility bear interest, at the Company’s option, at either the Base Rate (as defined in the Credit Agreement), plus an applicable margin, or LIBOR plus an applicable margin. The applicable margin for Base Rate loans is a range of 0.125% to 1.00% and the applicable margin for LIBOR loans is a range of 1.125% to 2.00%, both based on the leverage ratio of the Company at the end of each fiscal quarter. The rates at December 31, 2018 and September 30, 2019 were 4.253% and 3.350%, respectively.

Foreign Currency Exchange Risk

We are exposed to foreign currency exchange rate risk resulting from our operations outside of the U.S. We limit exposure to foreign currency fluctuations in most of our contracts through provisions that require client payments in currencies corresponding to the currency in which costs are incurred. As a result of this natural hedge, we generally do not need to hedge foreign currency cash flows for contract work performed.

Item 4. Controls and Procedures.

Evaluation of Disclosure Control and Procedures

Our management carried out, as of September 30, 2019 , with the participation of our Chief Executive Officer and our Chief Financial Officer, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2019 , our disclosure controls and procedures were effective to provide reasonable assurance that material information required to be disclosed by us in reports we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the third quarter of 2019, there were no changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

46

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

The information required by this Item 1 is included in “Note 13 – Commitments and Contingencies” included in the Notes to Consolidated Financial Statements appearing under Part I, Item 1 of this Quarterly Report on Form 10-Q which is incorporated herein by reference.

Item 1A. Risk Factors.

There have been no material changes from our Risk Factors disclosed in the Company’s Form S-1/A filed on April 29, 2019.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures.

Not Applicable

Item 5. Other Information.

Carey Smith was appointed to the role of President of Parsons Corporation, in addition to her current duties as Chief Operating Officer effective November 11, 2019.  In this position, she is responsible for Parsons operational business lines and supporting our customer’s missions. Charles L. Harrington will continue in his role as Chairman and Chief Executive Officer of Parsons Corporation. 

Parsons also announced the departure of Adam Taylor as Chief Transformation Officer effective November 11, 2019.

47

Item 6. Exhibits.

Exhibit Number	Description
31.1*	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

48

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Company Name
Date: November 12, 2019	By:	/s/ George L. Ball
		George L. Ball
		Chief Financial Officer
		(Principal Financial Officer)

49

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Charles L. Harrington, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Parsons Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 12, 2019	By:	/s/ Charles L. Harrington
		Charles L. Harrington
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, George L. Ball, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Parsons Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 12, 2019	By:	/s/ George L. Ball
		George L. Ball
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Parsons Corporation (the “Company”) on Form 10-Q for the period ending September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Charles L. Harrington, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: November 12, 2019	By:	/s/ Charles L. Harrington
		Charles L. Harrington
		Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Parsons Corporation (the “Company”) on Form 10-Q for the period ending September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, George L. Ball, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: November 12, 2019	By:	/s/ George L. Ball
		George L. Ball
		Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Debt and Credit Facilities - Schedule of Long Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Long-Term Debt issuance costs	$ (694)	$ (836)
Total long-term	249,306	429,164
Revolving Credit Facility
Debt Instrument [Line Items]
Long-term debt	0	180,000
Senior Notes
Debt Instrument [Line Items]
Long-term debt	$ 250,000	$ 250,000

XML

Intangible Assets - Schedule of Estimated Amortization Expense (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Goodwill And Intangible Assets Disclosure [Abstract]
2019 (remaining)	$ 23,049
2020	83,511
2021	78,778
2022	34,517
2023	22,599
Thereafter	38,703
Net Carrying Amount	$ 281,157	$ 179,518

XML

Contracts with Customers - Summary of Contract Assets and Contract Liabilities (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Revenue From Contract With Customer [Abstract]
Contract assets	$ 583,670	$ 515,319
Contract liabilities	231,032	208,576
Net contract assets (liabilities)	352,638	$ 306,743
Change in contract assets	68,351
Change in contract liabilities	22,456
Change in contract assets and liabilities	$ 45,895
Percentage change in contract assets	13.30%
Percentage change in contract liabilities	10.80%
Percentage change in contract assets and liabilities	15.00%

XML

Segment Information (Tables)

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Summary of Business Segment Information

The following table summarizes business segment revenue for the periods presented (in thousands):

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Federal Solutions revenue	$	443,725	$	486,175	$	1,076,125	$	1,387,484
Critical Infrastructure revenue		532,432		537,102		1,555,443		1,529,940
Total revenue	$	976,157	$	1,023,277	$	2,631,568	$	2,917,424

Summary of Adjusted EBITDA Business Segment Information

The following table reconciles business segment Adjusted EBITDA attributable to Parsons Corporation to Net Income attributable to Parsons Corporation for the periods presented (in thousands):

	Three Months Ended						Nine Months Ended
Adjusted EBITDA attributable to Parsons Corporation	September 28, 2018			September 30, 2019			September 28, 2018			September 30, 2019
Federal Solutions	$	45,556		$	50,359		$	101,052		$	126,658
Critical Infrastructure		38,006			33,976			80,296			102,177
Adjusted EBITDA attributable to Parsons Corporation		83,562			84,335			181,348			228,835
Adjusted EBITDA attributable to noncontrolling interests		5,002			4,655			10,681			8,384
Depreciation and amortization		(23,599	)		(31,027	)		(46,656	)		(92,692	)
Interest expense, net		(5,589	)		(4,482	)		(12,117	)		(18,448	)
Income tax (expense) benefit		(4,154	)		15,453			(18,526	)		67,063
Litigation-related gains(a)		-			-			129,674			-
Amortization of deferred gain resulting from sale-leaseback transactions(b)		1,798			-			5,440			-
Equity-based compensation		(5,049	)		1,657			(13,198	)		(45,504	)
Transaction-related costs(c)		(2,456	)		(9,891	)		(7,511	)		(26,961	)
Restructuring(d)		-			(309	)		-			(2,880	)
Other(e)		(3,449	)		902			(3,929	)		(2,973	)
Net income including noncontrolling interests		46,066			61,293			225,206			114,824
Net income attributable to noncontrolling interests		4,844			4,481			10,316			8,012
Net income attributable to Parsons Corporation	$	41,222		$	56,812		$	214,890		$	106,812

(a) Reversal of an accrued liability, with $55.1 million recorded to revenue and $74.6 million recorded to other income (“gain associated with claim on long-term contract”) in results of operations, associated with a lawsuit against a joint venture in which the Company is the managing partner.  Please see “Note 14 – Commitments and Contingencies” in the Company’s Form S-1/A filed on April 29, 2019, for a description of this matter, which was resolved in favor of the Company on June 13, 2018.

(b) Reflects recognized deferred gains related to sales-leaseback transactions described in “Note 10 – Sale-Leasebacks.”

(c) Reflects costs incurred in connection with acquisitions, the IPO, and other non-recurring transaction costs, primarily fees paid for professional services and employee retention.

(d) Reflects costs associated with corporate restructuring initiatives.

(e) Includes a combination of gain/loss related to sale of fixed assets, software implementation costs, and other individually insignificant items that are non-recurring in nature.

Summary of Revenues and Property and Equipment, Net by Geographic Area

The following tables presents revenues and property and equipment, net by geographic area (in thousands):

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Revenue
North America	$	805,320	$	849,839	$	2,131,562	$	2,400,124
Middle East		164,677		169,028		485,377		504,604
Rest of World		6,160		4,410		14,629		12,696
Total Revenue	$	976,157	$	1,023,277	$	2,631,568	$	2,917,424

The geographic location of revenue is determined by the location of the customer.  The prior reporting of revenue by geographic location has been conformed to the current presentation.

	December 31, 2018		September 30, 2019
Property and Equipment, Net
North America	$	86,847	$	103,690
Middle East		5,002		5,548
Total Property and Equipment, Net	$	91,849	$	109,238

Summary of Revenues by Business Lines

The following table presents revenues by business lines (in thousands):

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Revenue
Cyber & Intelligence	$	68,895	$	90,429	$	177,838	$	247,710
Defense		133,259		144,160		297,318		425,603
Mission Solutions		122,780		87,936		280,902		237,914
Engineered Systems		118,791		129,989		320,067		367,542
Geospatial		-		33,661		-		108,715
Federal Solutions revenues		443,725		486,175		1,076,125		1,387,484
Connected Communities		165,529		151,779		491,444		459,277
Mobility Solutions		300,523		286,199		894,796		836,779
Industrial		66,380		99,124		169,203		233,884
Critical Infrastructure revenues		532,432		537,102		1,555,443		1,529,940
Total Revenue	$	976,157	$	1,023,277	$	2,631,568	$	2,917,424

XML

Acquisitions - Summary of Estimated Fair Values of Assets Acquired and Liabilities Assumed on Preliminary Purchase Price Allocation (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jul. 31, 2019	Jan. 07, 2019	Dec. 31, 2018	May 31, 2018
Business Acquisition [Line Items]
Contract assets	$ 583,670			$ 515,319
Goodwill	1,050,077			736,938
Contract liabilities	(231,032)			$ (208,576)
Polaris Alpha
Business Acquisition [Line Items]
Cash and cash equivalents					$ 7,914
Accounts receivable					29,688
Contract assets					35,229
Prepaid expenses and other current assets					9,295
Property and equipment					9,024
Goodwill	$ 243,500				243,471
Intangible assets					199,520
Other noncurrent assets					2,203
Accounts payable					(13,942)
Accrued expenses and other current liabilities					(26,419)
Contract liabilities					(3,529)
Deferred tax liabilities					(2,231)
Other long-term liabilities					(1,146)
Net assets acquired					$ 489,077
OGSystems
Business Acquisition [Line Items]
Cash and cash equivalents			$ 5,772
Accounts receivable			9,904
Contract assets			9,747
Prepaid expenses and other current assets			4,307
Property and equipment			4,085
Right of use assets, operating leases			8,826
Goodwill			183,540
Intangible assets			92,300
Other noncurrent assets			10
Accounts payable			(5,450)
Accrued expenses and other current liabilities			(7,147)
Contract liabilities			(1,300)
Short-term lease liabilities, operating leases			(805)
Income tax payable			(1,469)
Deferred tax liabilities			(904)
Long-term lease liabilities, operating leases			(8,021)
Other long-term liabilities			(1,015)
Net assets acquired			$ 292,380
QRC Technologies
Business Acquisition [Line Items]
Cash and cash equivalents		$ 5,925
Accounts receivable		5,587
Prepaid expenses and other current assets		5,467
Property and equipment		1,205
Right of use assets, operating leases		5,228
Goodwill		128,387
Intangible assets		72,900
Accounts payable		(1,567)
Accrued expenses and other current liabilities		(3,771)
Short-term lease liabilities, operating leases		(545)
Long-term lease liabilities, operating leases		(4,683)
Net assets acquired		$ 214,133

XML

Earnings Per Share

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Earnings Per Share

18. Earnings Per Share

Basic earnings per common share is computed using the weighted average number of shares outstanding during the period and income available to shareholders.

Diluted earnings per share (“EPS”) is computed similar to basic EPS, except the weighted average number of shares outstanding is increased to include the dilutive effects of outstanding stock options and other stock-based awards. There were no dilutive securities outstanding for the three and nine months ended September 28, 2018 and September 30, 2019.

The weighted average number of shares used to compute basic and diluted EPS were:

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Basic weighted average number of shares outstanding		79,185,527		99,434,877		80,702,032		89,977,493
Dilutive common share equivalents		-		-		-		-
Diluted weighted average number of shares outstanding		79,185,527		99,434,877		80,702,032		89,977,493

XML

Retirement and Other Benefit Plans

9 Months Ended

Sep. 30, 2019

Compensation And Retirement Disclosure [Abstract]

Retirement and Other Benefit Plans

14. Retirement and Other Benefit Plans

The Company’s principal retirement benefit plan is the Parsons Employee Stock Ownership Plan (“ESOP”), a stock bonus plan, established in 1975 to cover eligible employees of the Company and certain affiliated companies. Contributions of treasury stock to the ESOP are made annually in amounts determined by the Company’s board of directors and are held in trust for the sole benefit of the participants. Shares allocated to a participant’s account are fully vested after six years of credited service, or in the event(s) of reaching age 65, death or disability while an active employee of the Company. All of the Company’s common stock was acquired by the ESOP in conjunction with a reorganization in 1984, which was financed by the Company.

Upon retirement, death, termination due to permanent disability, a severe financial hardship, conflict of interest or the exercise of diversification rights, participants’ interests in their ESOP accounts are redeemable at the current price per share of the stock.

There is a lock-up agreement in place through November 3, 2019 affecting the ability of the ESOP Trustee to trade shares of the Company’s stock.  During the lock-up period, the Trustee will redeem eligible participants’ interests in their ESOP accounts for cash, funded by the May 10, 2019 IPO Dividend described below.  If that cash is exhausted before the end of the lock-up period, participants will put their shares to the Company which will redeem them for cash.  Upon the expiration of the lock-up period, all shares held by the ESOP will be redeemable by participants in shares of the Company’s stock once vesting and eligibility requirements have been met. The Company presents all shares held by the ESOP as temporary equity on the consolidated balance sheets at their redemption value.  The Company elected the policy to adjust the temporary equity balance to the maximum redemption amount at each balance sheet date for units that are not currently redeemable.  Accordingly, at each balance sheet date, the Company will adjust the temporary equity balance to its maximum redemption amount with a corresponding offset to retained earnings.

Total ESOP contribution expense was $11.4 million and $12.3 million for the three months ended September 28, 2018 and September 30, 2019, respectively, and $34.1 million and $36.8 million for the nine months ended September 28, 2018 and September 30, 2019, respectively. The expense is recorded in “Direct costs of contracts” and “Indirect, general and administrative expense” in the consolidated statements of income. The fiscal 2019 ESOP contribution has not yet been made.  The amount is currently included in accrued liabilities.

At December 31, 2018 and September 30, 2019, 78,172,809 shares and 78,138,602 shares of the Company’s stock were held by the ESOP which the Company recorded at their aggregate redemption value of $1.9 billion and $2.6 billion, respectively. On April 3, 2019, the board of directors of the Company declared a cash dividend to the Company’s sole existing shareholder at that time, the ESOP, in the amount of $2.00 per share, or $52.1 million in the aggregate (the “IPO Dividend”). The IPO Dividend was paid on May 10, 2019. On April 15, 2019, the board of directors of the Company declared a common stock dividend in a ratio of two shares of common stock for every one share of common stock then held by the Company’s shareholder (the “Stock Dividend”). The record date of the Stock Dividend was May 7, 2019, the day immediately prior to the consummation of the Company’s IPO on May 8, 2019, and the payment date of the Stock Dividend was May 8, 2019. Purchasers of the Company’s common stock in the Company’s public offering were not entitled to receive any portion of the Stock Dividend. During the year ended December 31, 2018, the Company did not declare any dividends.  Please see the Company’sForm S-1/A, filed April 29, 2019, for a further discussion of the Company’s ESOP.

As part of an acquisition in 2014, the Company acquired a defined contribution pension plan, a defined benefit pension plan, and supplemental retirement plan. For the defined contribution pension plan, the Company contributes a base amount plus an additional amount based upon a predetermined formula. At December 31, 2018 and September 30, 2019, the defined benefit pension plan was in a net asset position of $1.7 million and $1.7 million, respectively, which is recorded in “Other noncurrent assets” on the consolidated balance sheets.

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Acquisitions (Tables)

9 Months Ended

Sep. 30, 2019

Polaris Alpha

Summary of Estimated Fair Values of Assets Acquired and Liabilities Assumed on Preliminary Purchase Price Allocation

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed (in thousands):

	Amount
Cash and cash equivalents	$	7,914
Accounts receivable		29,688
Contract assets		35,229
Prepaid expenses and other current assets		9,295
Property and equipment		9,024
Goodwill		243,471
Intangible assets		199,520
Other noncurrent assets		2,203
Accounts payable		(13,942	)
Accrued expenses and other current liabilities		(26,419	)
Contract liabilities		(3,529	)
Deferred tax liabilities		(2,231	)
Other long-term liabilities		(1,146	)
Net assets acquired	$	489,077

Schedule of Intangible Assets Value on Purchase Price

Of the total purchase price, the following values were assigned to intangible assets (in thousands, except for years):

	Gross Carrying Amount		Amortization Period
			(in years)
Developed technology	$	84,900	4
Customer relationships		76,000	8
Backlog		34,900	2
Trade name		3,600	1
Leases	$	120	6

Schedule of Supplemental Pro Forma Information

Supplemental information on an unaudited pro forma operating results assuming the Polaris Alpha acquisition had been consummated as of the beginning of fiscal year 2018 (December 31, 2017) (in thousands) is as follows:

	Three Months Ended		Nine Months Ended
	September 28, 2018		September 28, 2018
Pro forma revenue	$	976,157	$	2,784,864
Pro forma net income including noncontrolling interests	$	46,848	$	179,071

OGSystems

Summary of Estimated Fair Values of Assets Acquired and Liabilities Assumed on Preliminary Purchase Price Allocation

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed based on the preliminary purchase price allocation as of the date of acquisition (in thousands):

	Amount
Cash and cash equivalents	$	5,772
Accounts receivable		9,904
Contract assets		9,747
Prepaid expenses and other current assets		4,307
Property and equipment		4,085
Right of use assets, operating leases		8,826
Goodwill		183,540
Intangible assets		92,300
Other noncurrent assets		10
Accounts payable		(5,450	)
Accrued expenses and other current liabilities		(7,147	)
Contract liabilities		(1,300	)
Short-term lease liabilities, operating leases		(805	)
Income tax payable		(1,469	)
Deferred tax liabilities		(904	)
Long-term lease liabilities, operating leases		(8,021	)
Other long-term liabilities		(1,015	)
Net assets acquired	$	292,380

Schedule of Intangible Assets Value on Purchase Price

Of the total purchase price, the following values were assigned to intangible assets (in thousands, except for years):

	Gross Carrying Amount		Amortization Period
			(in years)
Customer relationships	$	57,100	5
Backlog		27,700	3
Trade name		3,800	2
Non-compete agreements		2,400	3
Developed technologies	$	1,300	3

Schedule of Supplemental Pro Forma Information

Supplemental information on an unaudited pro forma operating results assuming the OGSystems acquisition had been consummated as of the beginning of fiscal year 2018 (December 31, 2017) (in thousands) is as follows:

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Pro forma revenue	$	1,007,793	$	1,023,277	$	2,715,572	$	2,919,379
Pro forma net income including noncontrolling interests	$	39,224	$	61,293	$	196,905	$	118,896

QRC Technologies

Summary of Estimated Fair Values of Assets Acquired and Liabilities Assumed on Preliminary Purchase Price Allocation

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed based on the preliminary purchase price allocation as of the date of acquisition (in thousands):

	Amount
Cash and cash equivalents	$	5,925
Accounts receivable		5,587
Prepaid expenses and other current assets		5,467
Property and equipment		1,205
Right of use assets, operating leases		5,228
Goodwill		128,387
Intangible assets		72,900
Accounts payable		(1,567	)
Accrued expenses and other current liabilities		(3,771	)
Short-term lease liabilities, operating leases		(545	)
Long-term lease liabilities, operating leases		(4,683	)
Net assets acquired	$	214,133

Schedule of Intangible Assets Value on Purchase Price

Of the total purchase price, the following values were assigned to intangible assets (in thousands, except for years):

	Gross Carrying Amount		Amortization Period
			(in years)
Customer relationships	$	47,600	12
Backlog		700	1
Trade name		800	2
Non-compete agreements		1,200	4
Developed technologies	$	22,600	3-5

Schedule of Supplemental Pro Forma Information

Supplemental information on an unaudited pro forma operating results assuming the QRC Technologies acquisition had been consummated as of the beginning of fiscal year 2018 (December 31, 2017) (in thousands) is as follows:

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Pro forma revenue	$	987,343	$	1,026,831	$	2,657,105	$	2,938,973
Pro forma net income including noncontrolling interests	$	44,944	$	65,782	$	212,728	$	117,399

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Summary of Fair Value Assets Associated with Pension Plan

The following table sets forth assets associated with the pension plan in “Note 14 – Retirement and Other Benefit Plans” that are accounted for at fair value by Level within the fair value hierarchy.

Fair value as of December 31, 2018 (in thousands):

	Level 1		Level 2		Level 3		Total
Mutual funds	$	2,539	$	-	$	-	$	2,539
Fixed income		-		10,168		-		10,168
Cash and cash equivalents		361		-		-		361
	$	2,900	$	10,168	$	-	$	13,068

Fair value as of September 30, 2019 (in thousands):

	Level 1		Level 2		Level 3		Total
Mutual funds	$	2,888	$	-	$	-	$	2,888
Fixed income		-		10,579		-		10,579
Cash and cash equivalents		294		-		-		294
	$	3,182	$	10,579	$	-	$	13,761

Schedule of Fair Value of Redeemable Common Stock Associated Employee Stock Ownership Plan

The following table sets forth redeemable common stock associated with the ESOP in as described in “Note 14 – Retirement and Other Benefit Plans” that is accounted for at fair value by Level within the fair value hierarchy.

Fair value as of December 31, 2018 (in thousands):

	Level 1		Level 2		Level 3		Total
Redeemable common stock	$	-	$	-	$	1,876,309	$	1,876,309

Fair value as of September 30, 2019 (in thousands):

	Level 1		Level 2		Level 3		Total
Redeemable common stock	$	2,577,011	$	-	$	-	$	2,577,011

Schedule of Reconciliation Fair Value Measurements Using Significant Unobservable Inputs

The following tables present a reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3) (in thousands):

Balance at December 31, 2018	$	1,876,309
Transfer to Level 1		(1,876,309	)
Balance at September 30, 2019	$	-

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Contracts with Customers (Tables)

9 Months Ended

Sep. 30, 2019

Revenue From Contract With Customer [Abstract]

Summary of Disaggregation of Revenue

The Company’s contracts contain both fixed-price and cost reimbursable components. Contract types are based on the component that represents the majority of the contract. The following table presents revenue disaggregated by contract type (in thousands):

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Fixed-Price	$	300,225	$	288,316	$	833,224	$	850,658
Time-and-Materials		254,435		285,586		732,555		810,656
Cost-Plus		421,497		449,375		1,065,789		1,256,110
Total	$	976,157	$	1,023,277	$	2,631,568	$	2,917,424

Summary of Contract Assets and Contract Liabilities

Contract assets and contract liabilities balances at December 31, 2018 and September 30, 2019 were as follows (in thousands):

	December 31, 2018		September 30, 2019		$ change		% change
Contract assets	$	515,319	$	583,670	$	68,351		13.3	%
Contract liabilities		208,576		231,032		22,456		10.8	%
Net contract assets (liabilities) (1)	$	306,743	$	352,638	$	45,895		15.0	%

(1) Total contract retentions included in net contract assets (liabilities) were $89.6 millionas of December 31, 2018. Total contract retentions included in net contract assets (liabilities) were $87.1 millionas of September 30, 2019, of which $39.7 millionare not expected to be paid in the next 12 months. Contract assets at December 31, 2018 and September 30, 2019 include$47.1 million and $58.9 million,respectively, related to unapproved change orders, claims, and requests for equitable adjustment. For the three and nine months ended September 28, 2018 and September 30, 2019, there were no material losses recognized related to the collectability of claims, unapproved change orders, and requests for equitable adjustment.

Summary of Changes in Contract Assets and Contract Liabilities

The changes in contract assets and contract liabilities were the result of normal business activity and not significantly impacted by other factors, except as follows:

	December 31, 2018		September 30, 2019
Acquired contract assets	$	35,229	$	9,747
Acquired contract liabilities		3,529		1,300
Change in the estimate of variable consideration		-		14,506
Reversal of provision for contract losses (1)	$	133,180	$	-

(1) Reversal of provision for contract losses of $133.2 million, of which $55.1 million was recorded as an increase in revenue with the remainder recorded as other income.

Summary of Accounts Receivable, Net

Accounts receivable, net consisted of the following as of December 31, 2018 and September 30, 2019 (in thousands):

	December 31, 2018			September 30, 2019
Billed	$	538,808		$	516,099
Unbilled		135,180			200,477
Total accounts receivable, gross		673,988			716,576
Allowance for doubtful accounts		(50,702	)		(42,902	)
Total accounts receivable, net	$	623,286		$	673,674

Summary of Remaining Unsatisfied Performance Obligations Expect to Satisfy

The Company expects to satisfy its RUPO as of September 30, 2019 over the following periods (in thousands):

Period RUPO Will Be Satisfied	Within One Year		Within One to Two Years		Thereafter
Federal Solutions	$	1,198,634	$	436,620	$	208,734
Critical Infrastructure		1,636,525		960,469		643,170
Total	$	2,835,159	$	1,397,089	$	851,904

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Property and Equipment, Net (Tables)

9 Months Ended

Sep. 30, 2019

Property Plant And Equipment [Abstract]

Schedule of Property and equipment, net

Property and equipment consisted of the following at December 31, 2018 and September 30, 2019 (in thousands):

	December 31, 2018			September 30, 2019			Useful lives (years)
Buildings and leasehold improvements	$	54,348		$	71,698		1-15
Furniture and equipment		81,705			85,322		3-10
Computer systems and equipment		148,255			168,241		3-10
Construction equipment		12,074			11,753		5-7
Accumulated depreciation		(204,533	)		(227,776	)
Property and equipment, net	$	91,849		$	109,238

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Sale-Leasebacks

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Sale-Leasebacks

10. Sale-Leasebacks

During fiscal 2011, the Company consummated two sale-leaseback transactions associated with the sale of two office buildings from which the Company recognized a total gain in the consolidated statements of income (loss) of $106.7 million and a total deferred gain of $107.8 million. The current and long-term portion of the deferred gain had been recorded in “Accrued expenses and other current liabilities” and “Deferred gain resulting from sale-leaseback transactions” on the consolidated balance sheet at December 31, 2018, respectively, and was being recognized ratably over the minimum lease terms to which they relate, as an offset to rental expense in “Indirect, general and administrative expenses” in the consolidated statements of income. Amortization of the deferred gain was $1.8 millionfor the three months ended September 28, 2018 and $5.4 millionfor the nine months ended September 28, 2018. The deferred gain balance of $53.3 million as of December 31, 2018 was recognized as an adjustment to beginning retained earnings net of a deferred tax asset adjustment of $0.7 million during January 2019 in connection with the adoption of the new leasing standard. See “Note 6 – Leases”.

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 28, 2018
Cash flows from operating activities:
Net income including noncontrolling interests	$ 114,824	$ 225,206
Adjustments to reconcile net income to net cash used in operating activities
Depreciation and amortization	92,692	46,656
Amortization of deferred gain	0	(5,440)
Amortization of debt issue costs	802	548
Gain associated with claim on long-term contract	0	(129,674)
Loss on disposal of property and equipment	1,045	59
Provision for doubtful accounts	(964)	9,094
Deferred taxes	(105,161)	1,281
Foreign currency transaction gains and losses	1,689	2,007
Equity in earnings of unconsolidated joint ventures	(29,305)	(25,577)
Return on investments in unconsolidated joint ventures	32,848	31,728
Stock-based compensation	9,224
Contributions of treasury stock	36,779	34,070
Changes in assets and liabilities, net of acquisitions and newly consolidated joint ventures:
Accounts receivable	(31,726)	384,216
Contract assets	(59,161)	(527,768)
Prepaid expenses and current assets	2,980	(13,028)
Accounts payable	(6,946)	38,424
Accrued expenses and other current liabilities	40,186	9,558
Billings in excess of costs	0	(151,892)
Contract liabilities	20,703	168,579
Provision for contract losses	0	(13,992)
Income taxes	(3,019)	3,250
Other long-term liabilities	13,138	12,517
Net cash provided by operating activities	130,628	99,822
Cash flows from investing activities:
Capital expenditures	(44,030)	(19,436)
Proceeds from sale of property and equipment	2,824	112
Payments for acquisitions, net of cash acquired	(495,690)	(481,163)
Investments in unconsolidated joint ventures	(11,446)	(4,276)
Return of investments in unconsolidated joint ventures	6,632	1,126
Net cash used in investing activities	(541,710)	(503,637)
Cash flows from financing activities:
Proceeds from borrowings	530,000	260,000
Repayments of borrowings	(710,000)	(20,000)
Payments for debt costs and credit agreement	(286)	(468)
Contributions by noncontrolling interests	8,999	13,768
Distributions to noncontrolling interests	(35,378)	(6,858)
Purchase of treasury stock	(819)	(73,308)
IPO proceeds, net	536,879	0
Dividend paid	(52,093)	0
Net cash provided by financing activities	277,302	173,134
Effect of exchange rate changes	(953)	(1,233)
Net decrease in cash, cash equivalents, and restricted cash	(134,733)	(231,914)
Cash, cash equivalents and restricted cash:
Cash, cash equivalents and restricted cash, beginning of period	281,195	446,144
Cash, cash equivalents and restricted cash, end of period	$ 146,462	$ 214,230

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Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents (including $73,794 and $55,054 Cash of consolidated joint ventures)	$ 133,870	$ 280,221
Restricted cash and investments	12,592	974
Accounts receivable, net (including $180,325 and $164,460 Accounts receivable of consolidated joint ventures, net)	673,674	623,286
Contract assets (including $21,270 and $26,542 Contract assets of consolidated joint ventures)	583,670	515,319
Prepaid expenses and other current assets (including $11,837 and $8,149 Prepaid expenses and other current assets of consolidated joint ventures)	70,455	69,007
Total current assets	1,474,261	1,488,807
Property and equipment, net (including $2,561 and $3,171 Property and equipment of consolidated joint ventures, net)	109,238	91,849
Right of use assets, operating leases	219,207	0
Goodwill	1,050,077	736,938
Investments in and advances to unconsolidated joint ventures	66,584	63,560
Intangible assets, net	281,157	179,519
Deferred tax assets	111,610	5,680
Other noncurrent assets	50,510	46,225
Total assets	3,362,644	2,612,578
Current liabilities:
Accounts payable (including $87,914 and $90,692 Accounts payable of consolidated joint ventures)	226,563	226,345
Accrued expenses and other current liabilities (including $73,209 and $63,880 Accrued expenses and other current liabilities of consolidated joint ventures)	639,650	559,700
Contract liabilities (including $38,706 and $43,324 Contract liabilities of consolidated joint ventures)	231,032	208,576
Short-term lease liabilities, operating leases	49,074	0
Income taxes payable	9,940	11,540
Total current liabilities	1,156,259	1,006,161
Long-term employee incentives	45,749	41,913
Deferred gain resulting from sale-leaseback transactions	0	46,004
Long-term debt	249,306	429,164
Long-term lease liabilities, operating leases	188,571	0
Deferred tax liabilities	7,337	6,240
Other long-term liabilities	120,971	127,863
Total liabilities	1,768,193	1,657,345
Commitments and contingencies (Note 13)
Redeemable common stock held by Employee Stock Ownership Plan (ESOP), $1 par value; 78,172,809 and 78,138,602 shares outstanding, recorded at redemption value	2,577,011	1,876,309
Shareholders' equity (deficit):
Common stock, $1 par value; authorized 1,000,000,000 shares; 125,097,684 and 146,393,959 shares issued; 0 and 21,296,275 shares outstanding	21,296
Treasury stock, 46,918,140 and 46,959,082 shares at cost	(957,844)	(957,025)
Additional paid-in capital	8,772
Retained earnings (accumulated deficit)	(64,896)	12,445
Accumulated other comprehensive loss	(17,982)	(22,957)
Total Parsons Corporation shareholders' equity (deficit)	(1,010,654)	(967,537)
Noncontrolling interests	28,094	46,461
Total shareholders' equity (deficit)	(982,560)	(921,076)
Total liabilities, redeemable common stock and shareholders' equity (deficit)	$ 3,362,644	$ 2,612,578

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Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases

6. Leases

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)”, which is a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets obtained in exchange for lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

The Company elected to adopt the standard, and available practical expedients, effective January 1, 2019.  These practical expedients allowed the Company to keep the lease classification assessed under the previous lease accounting standard (ASC 840) without reassessment under the new standard, and allowed all separate lease components, including non-lease components, to be accounted for as a single lease component for all existing leases prior to adoption of the new standard.  Furthermore, the Company made an accounting policy election to not recognize a lease liability and ROU asset for leases with lease terms of twelve months or less.  

The Company adopted this new standard under the modified retrospective transition approach without adjusting comparative periods in the financial statements, as allowed under Topic 842, and implemented internal controls and key system functionality to enable the preparation of financial information on adoption.

The standard had a material impact on the Company’s consolidated balance sheets but did not have an impact on the consolidated income statements. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while accounting for finance leases remained substantially unchanged.

As a result of the adoption, the Company recorded a cumulative-effect adjustment to retained earnings of $52.6 million net of deferred tax asset adjustment of $0.7 million, representing the unamortized portion of a deferred gain previously recorded as a sale-leaseback transaction associated with the sale of an office building in 2011. The Company concluded the transaction resulted in the transfer of control of the office building to the buyer-lessor at market terms and would have qualified as a sale under Topic 842 with gain recognition in the period the sale was recognized.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets and current and long-term operating lease liabilities in the consolidated balance sheets. Finance leases are included in other noncurrent assets, accrued expenses and other current liabilities and other long-term liabilities in the consolidated balance sheets.  

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, incremental borrowing rates are used based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives.  Lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components, which are generally accounted for separately. For certain equipment leases, such as vehicles, we account for the lease and non-lease components as a single lease component. Additionally, for certain equipment leases, we apply a portfolio approach to effectively account for the operating lease ROU assets and liabilities.

The Company has operating and finance leases for corporate and project office spaces, vehicles, heavy machinery and office equipment. Our leases have remaining lease terms of one year to 10 years, some of which may include options to extend the leases for up to five years, and some of which may include options to terminate the leases up to the seventh year. As of September 30, 2019, assets recorded under finance leases were $1.8 millionand accumulated depreciation associated with finance leases was $0.5 million.

The components of lease costs for the three and nine months ended September 30, 2019 are as follows (in thousands):

	Three Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2019
Operating lease cost	$	17,969		$	53,835
Short-term lease cost		5,429			10,925
Amortization of right-of-use assets		120			455
Interest on lease liabilities		15			46
Sublease income		(712	)		(2,727	)
Total lease cost	$	22,821		$	62,534

Supplemental cash flow information related to leases for the nine months ended September 30, 2019 is as follows (in thousands):

	Nine Months Ended
	September 30, 2019
Operating cash flows for operating leases	$	52,056
Operating cash flows for financing activities		570
Right-of-use assets obtained in exchange for new operating lease liabilities		274,212
Right-of-use assets obtained in exchange for new finance lease liabilities	$	1,818

Supplemental balance sheet and other information related to leases as of September 30, 2019 is as follows (in thousands):

	September 30, 2019
Operating Leases:
Right-of-use assets	$	219,207
Lease liabilities:
Current	$	49,074
Long-term		188,571
Total operating lease liabilities	$	237,645
Finance Leases:
Other noncurrent assets	$	1,362
Lease liabilities:
Accrued expenses and other current liabilities	$	558
Other long-term liabilities		736
Total finance lease liabilities	$	1,294
Weighted Average Remaining Lease Term:
Operating leases	6 years
Finance leases	3 years
Weighted Average Discount Rate:
Operating leases		4.3	%
Finance leases		4.4	%

As of September 30, 2019, the Company has additional operating leases, primarily for office spaces, that have not yet commenced of $37.0 million. These operating leases will commence in 2019 with lease terms of 2 years to 11 years.

A maturity analysis of the future undiscounted cash flows associated with the Company’s operating and finance lease liabilities as of September 30, 2019 is as follows (in thousands):

	Operating Leases			Finance Leases
2019	$	15,409		$	160
2020		54,561			574
2021		50,333			421
2022		44,160			187
2023		36,996			25
Thereafter		64,423			-
Total lease payments		265,882			1,367
Less: imputed interest		(28,237	)		(73	)
Total present value of lease liabilities	$	237,645		$	1,294

As of December 31, 2018, $276.7 million of minimum rental commitments on operating leases was payable as follows: $67.9 million in 2019, $51.0 million in 2020, $42.5 million in 2021, $35.9 million in 2022, $29.4 million in 2023, and $50.0 million thereafter. Rental expense for the three and nine months ended September 28, 2018 was $21.7 million and $59.7 million, respectively.

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Earnings Per Share - Additional Information (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 28, 2018
Earnings Per Share [Abstract]
Dilutive securities outstanding	0	0	0	0

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Retirement and Other Benefit Plans - Additional Information (Details) - USD ($)			3 Months Ended		9 Months Ended		12 Months Ended
	Apr. 15, 2019	Apr. 03, 2019	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 28, 2018	Dec. 31, 2018
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Shares fully vested, Description					Shares allocated to a participant’s account are fully vested after six years of credited service, or in the event(s) of reaching age 65, death or disability while an active employee of the Company.
Shares fully vested after credited service					6 years
Company's stock held by ESOP			78,138,602		78,138,602		78,172,809
ESOP shares aggregate redemption, value			$ 2,600,000,000		$ 2,600,000,000		$ 1,900,000,000
Dividends payment, date	May 08, 2019
Dividends declared amount							0
Other Noncurrent Assets
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Defined benefit pension plan, net assets position			1,700,000		1,700,000		$ 1,700,000
Board of Directors
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Common stock dividend ratio	2
Common stock dividend date	May 07, 2019
Initial public offering date	May 08, 2019
Common stock dividend payment date	May 08, 2019
IPO | Board of Directors
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Dividends payable, amount per share		$ 2.00
Dividends payable		$ 52,100,000
Dividends payment, date		May 10, 2019
Direct Costs of Contracts and Indirect, General and Administrative Expense
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
ESOP contribution expense			$ 12,300,000	$ 11,400,000	$ 36,800,000	$ 34,100,000

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Related Party Transactions - Additional Information (Details) - Unconsolidated joint ventures - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 28, 2018
Related Party Transaction [Line Items]
Revenues	$ 28,800	$ 36,600	$ 113,100	$ 112,200
Reimbursable cost incurred	$ 20,500	$ 28,200	$ 86,300	$ 85,200

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Segment Information - Summary of Adjusted EBITDA Business Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 28, 2018
Adjusted EBITDA attributable to Parsons Corporation
Adjusted EBITDA attributable to Parsons Corporation	$ 84,335	$ 83,562	$ 228,835	$ 181,348
Adjusted EBITDA attributable to noncontrolling interests	4,655	5,002	8,384	10,681
Depreciation and amortization	(31,027)	(23,599)	(92,692)	(46,656)
Interest expense, net	(4,482)	(5,589)	(18,448)	(12,117)
Income tax (expense) benefit	15,453	(4,154)	67,063	(18,526)
Litigation-related gains	0		0	129,674
Amortization of deferred gain resulting from sale-leaseback transactions	0	1,798	0	5,440
Equity-based compensation	1,657	(5,049)	(45,504)	(13,198)
Transaction-related costs	(9,891)	(2,456)	(26,961)	(7,511)
Restructuring	(309)		(2,880)	0
Other	902	(3,449)	(2,973)	(3,929)
Net income including noncontrolling interests	61,293	46,066	114,824	225,206
Net income attributable to noncontrolling interests	4,481	4,844	8,012	10,316
Net income attributable to Parsons Corporation	56,812	41,222	106,812	214,890
Federal Solution Segment
Adjusted EBITDA attributable to Parsons Corporation
Adjusted EBITDA attributable to Parsons Corporation	50,359	45,556	126,658	101,052
Critical Infrastructure
Adjusted EBITDA attributable to Parsons Corporation
Adjusted EBITDA attributable to Parsons Corporation	$ 33,976	$ 38,006	$ 102,177	$ 80,296

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Leases - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	9 Months Ended
	Jan. 31, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 28, 2018	Dec. 31, 2018
Lessee Lease Description [Line Items]
Lease option to extend			five years
Lease existence of option to extend			true
Lease option to terminate			seventh year
Lease existence of option to terminate			true
Finance lease right-of-use asset			$ 1,800
Finance lease right of use assets accumulated depreciation			500
Operating lease not yet commenced expense			$ 37,000
Minimum rental commitments on operating leases, current					$ 276,700
Minimum rental commitments on operating leases, 2019					67,900
Minimum rental commitments on operating leases, 2020					51,000
Minimum rental commitments on operating leases, 2021					42,500
Minimum rental commitments on operating leases, 2022					35,900
Minimum rental commitments on operating leases, 2023					29,400
Minimum rental commitments on operating leases, thereafter					$ 50,000
Rent expense		$ 21,700		$ 59,700
Minimum [Member]
Lessee Lease Description [Line Items]
Lease term of contract			1 year
Operating lease not yet commenced term of contract			2 years
Maximum [Member]
Lessee Lease Description [Line Items]
Lease term of contract			10 years
Operating lease not yet commenced term of contract			11 years
Accounting Standards Update 2016-02
Lessee Lease Description [Line Items]
Cumulative effect adjustment to retained earnings			$ 52,608
Accounting Standards Update 2016-02 | Net Deferred Tax Asset
Lessee Lease Description [Line Items]
Cumulative effect adjustment to retained earnings			52,600
Accounting Standards Update 2016-02 | Deferred Tax Asset
Lessee Lease Description [Line Items]
Cumulative effect adjustment to retained earnings	$ 700		$ 700

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Contracts with Customers - Summary of Changes in Contract Assets and Contract Liabilities (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Revenue From Contract With Customer [Abstract]
Acquired contract assets	$ 9,747	$ 35,229
Acquired contract liabilities	1,300	3,529
Change in the estimate of variable consideration	14,506	0
Reversal of provision for contract losses	$ 0	$ 133,180

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Leases - Schedule of Maturity Analysis of Future Undiscounted Cash Flows (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Operating Leases
2019	$ 15,409
2020	54,561
2021	50,333
2022	44,160
2023	36,996
Thereafter	64,423
Total lease payments	265,882
Less: imputed interest	(28,237)
Total present value of lease liabilities	237,645
Finance Leases
2019	160
2020	574
2021	421
2022	187
2023	25
Thereafter	0
Total lease payments	1,367
Less: imputed interest	(73)
Total present value of lease liabilities	$ 1,294

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Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Summary of Lease Costs

The components of lease costs for the three and nine months ended September 30, 2019 are as follows (in thousands):

	Three Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2019
Operating lease cost	$	17,969		$	53,835
Short-term lease cost		5,429			10,925
Amortization of right-of-use assets		120			455
Interest on lease liabilities		15			46
Sublease income		(712	)		(2,727	)
Total lease cost	$	22,821		$	62,534

Schedule of Supplemental Cash Flow Information Related to Leases

Supplemental cash flow information related to leases for the nine months ended September 30, 2019 is as follows (in thousands):

	Nine Months Ended
	September 30, 2019
Operating cash flows for operating leases	$	52,056
Operating cash flows for financing activities		570
Right-of-use assets obtained in exchange for new operating lease liabilities		274,212
Right-of-use assets obtained in exchange for new finance lease liabilities	$	1,818

Schedule of Supplemental Balance Sheet and Other Information Related to Leases

Supplemental balance sheet and other information related to leases as of September 30, 2019 is as follows (in thousands):

	September 30, 2019
Operating Leases:
Right-of-use assets	$	219,207
Lease liabilities:
Current	$	49,074
Long-term		188,571
Total operating lease liabilities	$	237,645
Finance Leases:
Other noncurrent assets	$	1,362
Lease liabilities:
Accrued expenses and other current liabilities	$	558
Other long-term liabilities		736
Total finance lease liabilities	$	1,294
Weighted Average Remaining Lease Term:
Operating leases	6 years
Finance leases	3 years
Weighted Average Discount Rate:
Operating leases		4.3	%
Finance leases		4.4	%

Schedule of Maturity Analysis of Future Undiscounted Cash Flows

A maturity analysis of the future undiscounted cash flows associated with the Company’s operating and finance lease liabilities as of September 30, 2019 is as follows (in thousands):

	Operating Leases			Finance Leases
2019	$	15,409		$	160
2020		54,561			574
2021		50,333			421
2022		44,160			187
2023		36,996			25
Thereafter		64,423			-
Total lease payments		265,882			1,367
Less: imputed interest		(28,237	)		(73	)
Total present value of lease liabilities	$	237,645		$	1,294

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Debt and Credit Facilities (Tables)

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Schedule of Long Term Debt

Debt consisted of the following (in thousands):

Long-Term:	December 31, 2018			September 30, 2019
Revolving credit facility	$	180,000		$	-
Senior notes		250,000			250,000
Debt issuance costs		(836	)		(694	)
Total long-term	$	429,164		$	249,306

Schedule of Aggregate Amount Debt Repayable

On July 1, 2014, the Company finalized a private placement whereby the Company raised an aggregate amount of $250.0 million in debt repayable as follows (in thousands):

Tranche	Debt Amount		Maturity Date	Interest Rates
Senior Note, Series A	$	50,000	July 15, 2021		4.44	%
Senior Note, Series B		100,000	July 15, 2024		4.98	%
Senior Note, Series C		60,000	July 15, 2026		5.13	%
Senior Note, Series D	$	40,000	July 15, 2029		5.38	%

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Schedule of Weighted Average Number of Shares Used To Compute Basic and Diluted EPS

The weighted average number of shares used to compute basic and diluted EPS were:

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Basic weighted average number of shares outstanding		79,185,527		99,434,877		80,702,032		89,977,493
Dilutive common share equivalents		-		-		-		-
Diluted weighted average number of shares outstanding		79,185,527		99,434,877		80,702,032		89,977,493

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Property and Equipment, Net

9 Months Ended

Sep. 30, 2019

Property Plant And Equipment [Abstract]

Property and Equipment, Net

9. Property and Equipment, Net

Property and equipment consisted of the following at December 31, 2018 and September 30, 2019 (in thousands):

	December 31, 2018			September 30, 2019			Useful lives (years)
Buildings and leasehold improvements	$	54,348		$	71,698		1-15
Furniture and equipment		81,705			85,322		3-10
Computer systems and equipment		148,255			168,241		3-10
Construction equipment		12,074			11,753		5-7
Accumulated depreciation		(204,533	)		(227,776	)
Property and equipment, net	$	91,849		$	109,238

Depreciation expense for the three months ended September 28, 2018 and September 30, 2019 was$8.8 million and $8.9 million, respectively, and $24.0 million and $28.2 million, respectively, for the nine months ended September 28, 2018 and September 30, 2019.

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Consolidated Statements of Shareholder's Equity (Deficit) (Unaudited) - USD ($) $ in Thousands	Total	IPO	Redeemable Common Stock	Common Stock	Common Stock IPO	Treasury Stock	Additional Paid-In Capital	Additional Paid-In Capital IPO	Retained Earnings (Accumulated Deficit)	Accumulated Other Comprehensive Income (Loss)	Total Parsons Deficit	Total Parsons Deficit IPO	Noncontrolling Interest	Noncontrolling Interest IPO
Beginning balance at Dec. 29, 2017	$ (1,049,916)					$ (876,372)			$ (186,035)	$ (15,003)	$ (1,077,410)		$ 27,494
Beginning balance, Temporary Equity at Dec. 29, 2017			$ 1,855,305
Comprehensive income
Net income	225,206								214,890		214,890		10,316
Foreign currency translation gain (loss), net	(3,079)									(3,063)	(3,063)		(16)
Pension adjustments, net	(27)									(27)	(27)
Adjustment due to adoption of ASC | ASC 606	(4,632)								(4,735)		(4,735)		103
Purchase of treasury stock	0					(73,308)			73,308		0
Contributions	13,768												13,768
Distributions	(6,858)												(6,858)
Ending Balance at Sep. 28, 2018	(825,538)			$ 0		(949,680)	$ 0		97,428	(18,093)	(870,345)		44,807
Ending Balance, Temporary Equity at Sep. 28, 2018			1,781,997
Comprehensive income
Temporary equity, Purchase of treasury stock			(73,308)
Beginning balance at Jun. 29, 2018	(869,936)			0		(909,368)	0		15,894	(20,397)	(913,871)		43,935
Beginning balance, Temporary Equity at Jun. 29, 2018			1,822,309
Comprehensive income
Net income	46,066								41,222		41,222		4,844
Foreign currency translation gain (loss), net	2,303									2,294	2,294		9
Pension adjustments, net	10									10	10
Purchase of treasury stock	0					(40,312)			40,312		0
Contributions	115												115
Distributions	(4,096)												(4,096)
Ending Balance at Sep. 28, 2018	(825,538)			0		(949,680)	0		97,428	(18,093)	(870,345)		44,807
Ending Balance, Temporary Equity at Sep. 28, 2018			1,781,997
Comprehensive income
Temporary equity, Purchase of treasury stock			(40,312)
Beginning balance at Dec. 31, 2018	(921,076)			0		(957,025)	0		12,445	(22,957)	(967,537)		46,461
Beginning balance, Temporary Equity at Dec. 31, 2018	1,876,309		1,876,309
Comprehensive income
Net income	114,824								106,812		106,812		8,012
Foreign currency translation gain (loss), net	4,958									4,958	4,958		0
Pension adjustments, net	17									17	17
Adjustment due to adoption of ASC | ASC 842	52,608								52,608		52,608
Purchase of treasury stock	0					(819)			819		0
Contributions	8,999												8,999
Distributions	(35,378)												(35,378)
Dividend paid	(52,093)								(52,093)		(52,093)		0
Stock-based compensation	9,224						9,224				9,224
Conversion of S-Corp to C-Corp	(25,877)								(25,877)		(25,877)
Temporary equity, Conversion of S-Corp to C-Corp			25,877
IPO proceeds, net		$ 536,878			$ 21,296			$ 515,582				$ 536,878		$ 0
Accretion of redeemable common stock	(675,644)						(516,034)		(159,610)		(675,644)
Temporary equity, Accretion of redeemable common stock			675,644
Ending Balance at Sep. 30, 2019	(982,560)			21,296		(957,844)	8,772		(64,896)	(17,982)	(1,010,654)		28,094
Ending Balance, Temporary Equity at Sep. 30, 2019	2,577,011		2,577,011
Comprehensive income
Temporary equity, Purchase of treasury stock			(819)
Beginning balance at Jun. 30, 2019	(1,342,226)			21,296		(957,844)	0		(424,886)	(18,144)	(1,379,578)		37,352
Beginning balance, Temporary Equity at Jun. 30, 2019			2,880,189
Comprehensive income
Net income	61,293								56,812		56,812		4,481
Foreign currency translation gain (loss), net	171									171	171		0
Pension adjustments, net	(9)									(9)	(9)
Contributions	852												852
Distributions	(14,591)												(14,591)
Stock-based compensation	9,224						9,224				9,224
IPO proceeds, net		$ (452)						$ (452)				$ (452)
Accretion of redeemable common stock	303,178								303,178		303,178
Temporary equity, Accretion of redeemable common stock			(303,178)
Ending Balance at Sep. 30, 2019	(982,560)			$ 21,296		$ (957,844)	$ 8,772		$ (64,896)	$ (17,982)	$ (1,010,654)		$ 28,094
Ending Balance, Temporary Equity at Sep. 30, 2019	$ 2,577,011		$ 2,577,011

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Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Cash and cash equivalents	$ 133,870	$ 280,221
Accounts receivable, net	673,674	623,286
Contract assets	583,670	515,319
Prepaid expenses and other current assets	70,455	69,007
Property and equipment, net	109,238	91,849
Accounts payable	226,563	226,345
Accrued expenses and other current liabilities	639,650	559,700
Contract liabilities	$ 231,032	$ 208,576
Temporary equity, par value	$ 1	$ 1
Temporary equity, shares outstanding	78,138,602	78,172,809
Common stock, par value	$ 1	$ 1
Common stock, authorized	1,000,000,000	1,000,000,000
Common stock, issued	146,393,959	125,097,684
Common stock, outstanding	21,296,275	0
Treasury stock, shares	46,959,082	46,918,140
Consolidated Joint Ventures
Cash and cash equivalents	$ 55,054	$ 73,794
Accounts receivable, net	164,460	180,325
Contract assets	26,542	21,270
Prepaid expenses and other current assets	8,149	11,837
Property and equipment, net	3,171	2,561
Accounts payable	90,692	87,914
Accrued expenses and other current liabilities	63,880	73,209
Contract liabilities	$ 43,324	$ 38,706

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Contracts with Customers

9 Months Ended

Sep. 30, 2019

Revenue From Contract With Customer [Abstract]

Contracts with Customers

5. Contracts with Customers

Disaggregation of Revenue

The Company’s contracts contain both fixed-price and cost reimbursable components. Contract types are based on the component that represents the majority of the contract. The following table presents revenue disaggregated by contract type (in thousands):

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Fixed-Price	$	300,225	$	288,316	$	833,224	$	850,658
Time-and-Materials		254,435		285,586		732,555		810,656
Cost-Plus		421,497		449,375		1,065,789		1,256,110
Total	$	976,157	$	1,023,277	$	2,631,568	$	2,917,424

See “Note 19 – Segments Information” for the Company’s revenues by business lines.

Contract Assets and Contract Liabilities

Contract assets and contract liabilities balances at December 31, 2018 and September 30, 2019 were as follows (in thousands):

	December 31, 2018		September 30, 2019		$ change		% change
Contract assets	$	515,319	$	583,670	$	68,351		13.3	%
Contract liabilities		208,576		231,032		22,456		10.8	%
Net contract assets (liabilities) (1)	$	306,743	$	352,638	$	45,895		15.0	%

(1) Total contract retentions included in net contract assets (liabilities) were $89.6 millionas of December 31, 2018. Total contract retentions included in net contract assets (liabilities) were $87.1 millionas of September 30, 2019, of which $39.7 millionare not expected to be paid in the next 12 months. Contract assets at December 31, 2018 and September 30, 2019 include$47.1 million and $58.9 million,respectively, related to unapproved change orders, claims, and requests for equitable adjustment. For the three and nine months ended September 28, 2018 and September 30, 2019, there were no material losses recognized related to the collectability of claims, unapproved change orders, and requests for equitable adjustment.

During the three months ended September 28, 2018 and September 30, 2019, the Company recognized revenue of $0.8 million and$2.1 million, respectively, and $100.4 million and $115.1 million during the nine months ended September 28, 2018 and September 30, 2019, respectively, that was included in the corresponding contract liability balance at December 30, 2017 and December 31, 2018, respectively. The changes in contract assets and contract liabilities were the result of normal business activity and not significantly impacted by other factors, except as follows:

	December 31, 2018		September 30, 2019
Acquired contract assets	$	35,229	$	9,747
Acquired contract liabilities		3,529		1,300
Change in the estimate of variable consideration		-		14,506
Reversal of provision for contract losses (1)	$	133,180	$	-

(1) Reversal of provision for contract losses of $133.2 million, of which $55.1 million was recorded as an increase in revenue with the remainder recorded as other income.

There was no significant impairment of contract assets recognized during the three and nine months ended September 28, 2018 and September 30, 2019.

Revisions in estimates, such as changes in estimated claims or incentives, related to performance obligations partially satisfied in previous periods that individually had an impact of $5 million or more on revenue resulted in an increase in revenue of $9.1 million for the three and nine months ended September 30, 2019, and no amounts for the three and nine months ended September 28, 2018.    

Accounts Receivable, net

Accounts receivable, net consisted of the following as of December 31, 2018 and September 30, 2019 (in thousands):

	December 31, 2018			September 30, 2019
Billed	$	538,808		$	516,099
Unbilled		135,180			200,477
Total accounts receivable, gross		673,988			716,576
Allowance for doubtful accounts		(50,702	)		(42,902	)
Total accounts receivable, net	$	623,286		$	673,674

Billed accounts receivable represents amounts billed to clients that have not been collected. Unbilled accounts receivable represents amounts where the Company has a present contractual right to bill but an invoice has not been issued to the customer at the period-end date.

The allowance for doubtful accounts was determined based on consideration of trends in actual and forecasted credit quality of clients, including delinquency and payment history, type of client, such as a government agency or commercial sector client, and general economic conditions and particular industry conditions that may affect a client’s ability to pay.

Transaction Price Allocated to the Remaining Unsatisfied Performance Obligations

The Company’s remaining unsatisfied performance obligations (“RUPO”) as of September 30, 2019 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress. The Company had $5.1 billion in RUPO as of September 30, 2019.

RUPO will increase with awards of new contracts and decrease as the Company performs work and recognizes revenue on existing contracts. Projects are included within RUPO at such time the project is awarded and agreement on contract terms has been reached. The difference between RUPO and backlog relates to unexercised option years that are included within backlog and the value of Indefinite Delivery/Indefinite Quantity (“IDIQ”) contracts included in backlog for which delivery orders have not been issued.

RUPO is comprised of: (a) original transaction price, (b) change orders for which written confirmations from our customers have been received, (c) pending change orders for which the Company expects to receive confirmations in the ordinary course of business, and (d) claim amounts that the Company has made against customers for which it has determined that it has a legal basis under existing contractual arrangements and a significant reversal of revenue is not probable, less revenue recognized to-date.

The Company expects to satisfy its RUPO as of September 30, 2019 over the following periods (in thousands):

Period RUPO Will Be Satisfied	Within One Year		Within One to Two Years		Thereafter
Federal Solutions	$	1,198,634	$	436,620	$	208,734
Critical Infrastructure		1,636,525		960,469		643,170
Total	$	2,835,159	$	1,397,089	$	851,904

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Earnings Per Share - Schedule of Weighted Average Number of Shares Used To Compute Basic and Diluted EPS (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 28, 2018
Earnings Per Share [Abstract]
Basic weighted average number of shares outstanding	99,434,877	79,185,527	89,977,493	80,702,032
Dilutive common share equivalents	0	0	0	0
Diluted weighted average number of shares outstanding	99,434,877	79,185,527	89,977,493	80,702,032

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Investments in and Advances to Joint Ventures - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 28, 2018	Dec. 31, 2018
Schedule Of Equity Method Investments [Line Items]
Letters of credit outstanding amount	$ 220.6		$ 220.6		$ 223.0
Unconsolidated Joint Ventures
Schedule Of Equity Method Investments [Line Items]
Net distributions from (contributions to) unconsolidated joint ventures	13.7	$ 20.1	28.0	$ 28.6
Consolidated Joint Ventures
Schedule Of Equity Method Investments [Line Items]
Letters of credit outstanding amount	$ 72.4		$ 72.4		$ 76.8

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Related Party Transactions - Schedule of Consolidated Balance Sheet Related to Services Provided to Unconsolidated Joint Ventures (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Related Party Transaction [Line Items]
Contract assets	$ 583,670	$ 515,319
Contract liabilities	231,032	208,576
Unconsolidated Joint Ventures
Related Party Transaction [Line Items]
Accounts receivable	44,637	38,742
Contract assets	2,734	2,648
Contract liabilities	$ 5,517	$ 10,861

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Segment Information - Summary of Adjusted EBITDA Business Segment Information (Parenthetical) (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Sep. 28, 2018
Segment Reporting Information [Line Items]
Reversal of accrued liability	$ 0	$ 0	$ 129,674
Revenue
Segment Reporting Information [Line Items]
Reversal of accrued liability			55,100
Other Income
Segment Reporting Information [Line Items]
Reversal of accrued liability			$ 74,600

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Leases - Schedule of Supplemental Balance Sheet and Other Information Related to Leases (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Operating Leases:
Right of use assets, operating leases	$ 219,207	$ 0
Lease liabilities:
Short-term lease liabilities, operating leases	49,074	0
Long-term lease liabilities, operating leases	188,571	$ 0
Total operating lease liabilities	237,645
Finance Leases:
Other noncurrent assets	1,362
Lease liabilities:
Accrued expenses and other current liabilities	$ 558
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List]	psn:AccruedExpensesAndOtherCurrentLiabilities
Other long-term liabilities	$ 736
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	us-gaap:OtherLiabilitiesNoncurrent
Total finance lease liabilities	$ 1,294
Weighted Average Remaining Lease Term:
Operating leases	6 years
Finance leases	3 years
Weighted Average Discount Rate:
Operating leases	4.30%
Finance leases	4.40%

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Contracts with Customers - Summary of Remaining Unsatisfied Performance Obligations Expect to Satisfy (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Remaining unsatisfied performance obligations	$ 5,100,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-10-01
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Remaining unsatisfied performance obligations	$ 2,835,159
Revenue, remaining performance obligation, expected timing of satisfaction, period	3 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-01-01
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Remaining unsatisfied performance obligations	$ 1,397,089
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-01-01
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Remaining unsatisfied performance obligations	$ 851,904
Revenue, remaining performance obligation, expected timing of satisfaction, period
Federal Solution Segment | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-10-01
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Remaining unsatisfied performance obligations	$ 1,198,634
Revenue, remaining performance obligation, expected timing of satisfaction, period	3 months
Federal Solution Segment | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-01-01
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Remaining unsatisfied performance obligations	$ 436,620
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Federal Solution Segment | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-01-01
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Remaining unsatisfied performance obligations	$ 208,734
Revenue, remaining performance obligation, expected timing of satisfaction, period
Critical Infrastructure | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-10-01
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Remaining unsatisfied performance obligations	$ 1,636,525
Revenue, remaining performance obligation, expected timing of satisfaction, period	3 months
Critical Infrastructure | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-01-01
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Remaining unsatisfied performance obligations	$ 960,469
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Critical Infrastructure | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-01-01
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Remaining unsatisfied performance obligations	$ 643,170
Revenue, remaining performance obligation, expected timing of satisfaction, period

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Contracts with Customers - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 28, 2018
Revenue From Contract With Customer [Abstract]
Revenue recognized included contract liability	$ 2,100,000	$ 800,000	$ 115,100,000	$ 100,400,000
Impairment of contract assets	0	0	0	0
Impact of changes in estimated claims or incentives on revenue	5,000,000	0	5,000,000	0
Increase in revenue due to Impact of changes in estimated claims or incentives	9,100,000	$ 0	9,100,000	$ 0
Remaining unsatisfied performance obligations	$ 5,100,000,000		$ 5,100,000,000

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Sale-Leasebacks - Additional Information (Detail) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Jan. 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Sep. 28, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 28, 2018 USD ($)	Dec. 31, 2011 USD ($) building	Dec. 31, 2018 USD ($)
Sale Leaseback Transaction [Line Items]
Sale leaseback transaction, description				During fiscal 2011, the Company consummated two sale-leaseback transactions associated with the sale of two office buildings
Number of sale leaseback transaction associated with sale | building						2
Gain recognized to the sale leaseback transaction						$ 106,700
Deferred gain resulting from sale-leaseback transactions		$ 0		$ 0		$ 107,800	$ 46,004
Amortization of deferred gain		$ 0	$ 1,798	0	$ 5,440
Accounting Standards Update 2016-02
Sale Leaseback Transaction [Line Items]
Deferred gain balance recognized							$ 53,300
Cumulative effect adjustment to retained earnings				52,608
Accounting Standards Update 2016-02 | Deferred Tax Asset
Sale Leaseback Transaction [Line Items]
Cumulative effect adjustment to retained earnings	$ 700			$ 700

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Intangible Assets - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 30, 2018
Goodwill And Intangible Assets Disclosure [Abstract]
Amortization expense of intangible assets	$ 22.1	$ 14.8	$ 64.5	$ 22.7

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Description of Operations - Additional Information (Details) - USD ($)					9 Months Ended
	May 31, 2019	May 14, 2019	May 08, 2019	Apr. 15, 2019	Sep. 30, 2019	Sep. 28, 2018
Description Of Operations Disclosure [Line Items]
Proceeds from IPO					$ 536,879,000	$ 0
Funds to dividend through public offering		$ 52,100,000
Repayment on term loan through public offering		$ 150,000
Common stock dividend ratio				200.00%
Dividends payment, date				May 08, 2019
IPO | Common Stock
Description Of Operations Disclosure [Line Items]
Common stock shares sold			18,518,500
Common stock sold per share			$ 27.00
Share price		$ 25.515
Proceeds from IPO		$ 536,900,000
Underwriters | Common Stock
Description Of Operations Disclosure [Line Items]
Purchase of additional shares upon exercise of options	2,777,775
Underwriting discount per share		$ 1.485
Proceeds from IPO		$ 536,900,000

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Acquisitions - Schedule of Intangible Assets Value on Purchase Price (Details) - USD ($) $ in Thousands				9 Months Ended
	Jul. 31, 2019	Jan. 07, 2019	May 31, 2018	Sep. 30, 2019
Developed Technology
Acquired Finite Lived Intangible Assets [Line Items]
Amortization Period (in years)				4 years
Developed Technology | Polaris Alpha
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount			$ 84,900
Amortization Period (in years)			4 years
Developed Technology | OGSystems
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount		$ 1,300
Amortization Period (in years)		3 years
Developed Technology | QRC Technologies
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 22,600
Developed Technology | QRC Technologies | Minimum
Acquired Finite Lived Intangible Assets [Line Items]
Amortization Period (in years)	3 years
Developed Technology | QRC Technologies | Maximum
Acquired Finite Lived Intangible Assets [Line Items]
Amortization Period (in years)	5 years
Customer Relationships
Acquired Finite Lived Intangible Assets [Line Items]
Amortization Period (in years)				7 years
Customer Relationships | Polaris Alpha
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount			$ 76,000
Amortization Period (in years)			8 years
Customer Relationships | OGSystems
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount		$ 57,100
Amortization Period (in years)		5 years
Customer Relationships | QRC Technologies
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 47,600
Amortization Period (in years)	12 years
Backlog
Acquired Finite Lived Intangible Assets [Line Items]
Amortization Period (in years)				3 years
Backlog | Polaris Alpha
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount			$ 34,900
Amortization Period (in years)			2 years
Backlog | OGSystems
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount		$ 27,700
Amortization Period (in years)		3 years
Backlog | QRC Technologies
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 700
Amortization Period (in years)	1 year
Trade Name
Acquired Finite Lived Intangible Assets [Line Items]
Amortization Period (in years)				1 year
Trade Name | Polaris Alpha
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount			$ 3,600
Amortization Period (in years)			1 year
Trade Name | OGSystems
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount		$ 3,800
Amortization Period (in years)		2 years
Trade Name | QRC Technologies
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 800
Amortization Period (in years)	2 years
Leases
Acquired Finite Lived Intangible Assets [Line Items]
Amortization Period (in years)				5 years
Leases | Polaris Alpha
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount			$ 120
Amortization Period (in years)			6 years
Non compete Agreements
Acquired Finite Lived Intangible Assets [Line Items]
Amortization Period (in years)				3 years
Non compete Agreements | OGSystems
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount		$ 2,400
Amortization Period (in years)		3 years
Non compete Agreements | QRC Technologies
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,200
Amortization Period (in years)	4 years

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Contracts with Customers - Summary of Contract Assets and Contract Liabilities (Parenthetical) (Details) - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018
Revenue From Contract With Customer [Abstract]
Contract retentions	$ 87.1	$ 89.6
Contract retentions, not expected to be paid in next 12 months	39.7
Contract assets, unapproved change orders, claims, and requests	$ 58.9	$ 47.1

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Basis of Presentation and Principles of Consolidation (Policies)

9 Months Ended

Sep. 30, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Accumulated Deficit

Accumulated Deficit

The Company's accounting policy is to record dividends and accretion of redeemable stock as a reduction of retained earnings. In the absence of retained earnings, the Company will charge the dividends and/or accretion of redeemable stock to Additional Paid-in Capital until depleted and will then charge the remainder to accumulated deficit. As a result of the change in tax status from "S" Corporation to "C" Corporation in the second quarter of 2019, the Company reclassified historical retained earnings for the "S" Corporation from retained earnings to Additional Paid in Capital as of the date of conversion. Subsequent changes in accumulated deficit are related to increases or decreases in the maximum redemption value of redeemable common stock.

Fiscal Periods

Fiscal Periods

In October 2018, our board of directors approved a change in our annual and quarterly fiscal period ends from the last Friday on or before the calendar year or quarterly month-end to the last day of the calendar year or quarterly month-end. Accordingly, the period end for the first, second, and third quarters of fiscal 2018 and fiscal 2019 are March 30, 2018, June 29, 2018, and September 28, 2018, respectively, and March 31, 2019, June 30, 2019, and September 30, 2019, respectively.  The number of days in the three- and nine-month periods ended September 28, 2018 and September 30, 2019 were 91 and 273, respectively, and 92 and 273, respectively.

Use of Estimates

Use of Estimates

The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates. The Company’s most significant estimates and judgments involve revenue recognition with respect to the determination of the costs to complete contracts and transaction price; determination of self-insurance reserves; valuation of the Company’s fair value of common stock (for periods prior to the IPO); useful lives of property and equipment and intangible assets; calculation of allowance for doubtful accounts; valuation of deferred income tax assets and uncertain tax positions, among others. Please see “Note 2 – Summary of Significant Accounting Policies” of Notes to Consolidated Financial Statements included in the Company’s Form S-1/A filed April 29, 2019, for a discussion of the significant estimates and assumptions affecting our consolidated financial statements.  Estimates of costs to complete contracts are continually evaluated as work progresses and are revised when necessary. When a change in estimate is determined to have an impact on contract profit, the Company records a positive or negative adjustment to the consolidated statement of income.

Inventory

Inventory

Included in Prepaid expenses and other current assets in the Company’s consolidated balances sheets is inventory.  Inventory consists of uninstalled materials received by the Company awaiting installation at our project sites and raw materials, work-in-process, and finished goods related to the manufacture of advance technology equipment.  Uninstalled materials inventory and the inventory related to advance technology equipment is carried on the Company’s consolidated balance sheets at the lower of cost (which approximates average cost) or net realizable value.

Redeemable Common Stock

Redeemable Common Stock

In connection with the Company’s IPO on May 8, 2019, all Employee Stock Ownership Plan (“ESOP”) shares were contingently redeemable for cash during the 180-day lock-up period which ended on November 3, 2019.  During the 180-day lock-up period, the Company presented all shares held by the ESOP as temporary equity on the consolidated balance sheets as Redeemable common stock held by Employee Stock Ownership Plan (ESOP) at their redemption value.  The consolidated balance sheet, to be presented in the Company’s 2019 Annual Report on Form 10-K, at December 31, 2019 will reflect the reclassification of redeemable common stock held by the ESOP from temporary equity to permanent equity as the lock-up period expires in the fourth quarter.  At the conclusion of the lock-up period all shares held by the ESOP will be redeemable by participants in shares of the Company’s common stock once vesting and eligibility requirements have been met.  

Leases

Leases

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)”, which is a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets obtained in exchange for lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

The Company elected to adopt the standard, and available practical expedients, effective January 1, 2019.  These practical expedients allowed the Company to keep the lease classification assessed under the previous lease accounting standard (ASC 840) without reassessment under the new standard, and allowed all separate lease components, including non-lease components, to be accounted for as a single lease component for all existing leases prior to adoption of the new standard.  Furthermore, the Company made an accounting policy election to not recognize a lease liability and ROU asset for leases with lease terms of twelve months or less.  

The Company adopted this new standard under the modified retrospective transition approach without adjusting comparative periods in the financial statements, as allowed under Topic 842, and implemented internal controls and key system functionality to enable the preparation of financial information on adoption.

The standard had a material impact on the Company’s consolidated balance sheets but did not have an impact on the consolidated income statements. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while accounting for finance leases remained substantially unchanged.

As a result of the adoption, the Company recorded a cumulative-effect adjustment to retained earnings of $52.6 million net of deferred tax asset adjustment of $0.7 million, representing the unamortized portion of a deferred gain previously recorded as a sale-leaseback transaction associated with the sale of an office building in 2011. The Company concluded the transaction resulted in the transfer of control of the office building to the buyer-lessor at market terms and would have qualified as a sale under Topic 842 with gain recognition in the period the sale was recognized.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets and current and long-term operating lease liabilities in the consolidated balance sheets. Finance leases are included in other noncurrent assets, accrued expenses and other current liabilities and other long-term liabilities in the consolidated balance sheets.  

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, incremental borrowing rates are used based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives.  Lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components, which are generally accounted for separately. For certain equipment leases, such as vehicles, we account for the lease and non-lease components as a single lease component. Additionally, for certain equipment leases, we apply a portfolio approach to effectively account for the operating lease ROU assets and liabilities.

The Company has operating and finance leases for corporate and project office spaces, vehicles, heavy machinery and office equipment. Our leases have remaining lease terms of one year to 10 years, some of which may include options to extend the leases for up to five years, and some of which may include options to terminate the leases up to the seventh year. As of September 30, 2019, assets recorded under finance leases were $1.8 millionand accumulated depreciation associated with finance leases was $0.5 million.

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

17. Fair Value of Financial Instruments

The authoritative guidance on fair value measurement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (referred to as an “exit price”). At December 31, 2018 and September 30, 2019, the Company’s financial instruments include cash, cash equivalents, accounts receivable, accounts payable, and other liabilities. The fair values of these financial instruments approximate their carrying values due to their short-term maturities.

Investments measured at fair value are based on one or more of the following three valuation techniques:

• Market approach—Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities;

• Cost approach—Amount that would be required to replace the service capacity of an asset (i.e., replacement cost); and

• Income approach—Techniques to convert future amounts to a single present amount based on market expectations (including present value techniques, option-pricing models and lattice models).

In addition, the guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are:

Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities;

Level 2 Pricing inputs that include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument; and

Level 3 Prices or valuations that require inputs that are both significant to the fair value measurements and unobservable.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following table sets forth assets associated with the pension plan in “Note 14 – Retirement and Other Benefit Plans” that are accounted for at fair value by Level within the fair value hierarchy.

Fair value as of December 31, 2018 (in thousands):

	Level 1		Level 2		Level 3		Total
Mutual funds	$	2,539	$	-	$	-	$	2,539
Fixed income		-		10,168		-		10,168
Cash and cash equivalents		361		-		-		361
	$	2,900	$	10,168	$	-	$	13,068

Fair value as of September 30, 2019 (in thousands):

	Level 1		Level 2		Level 3		Total
Mutual funds	$	2,888	$	-	$	-	$	2,888
Fixed income		-		10,579		-		10,579
Cash and cash equivalents		294		-		-		294
	$	3,182	$	10,579	$	-	$	13,761

As described in “Note 14 – Retirement and Other Benefit Plans,” the Company acquired a defined contribution pension plan, a defined benefit pension plan, and supplemental retirement plans. At December 31, 2018 and September 30, 2019, the Company measured the mutual funds held within the defined benefit pension plan at fair value using unadjusted quoted prices in active markets that are accessible for identical assets. The Company measured the fixed income securities using market bid and ask prices. The inputs that are significant to valuation of fixed income securities are generally observable and therefore have been classified as Level 2.

The following table sets forth redeemable common stock associated with the ESOP in as described in “Note 14 – Retirement and Other Benefit Plans” that is accounted for at fair value by Level within the fair value hierarchy.

Fair value as of December 31, 2018 (in thousands):

	Level 1		Level 2		Level 3		Total
Redeemable common stock	$	-	$	-	$	1,876,309	$	1,876,309

Fair value as of September 30, 2019 (in thousands):

	Level 1		Level 2		Level 3		Total
Redeemable common stock	$	2,577,011	$	-	$	-	$	2,577,011

As described in “Note 14 – Retirement and Other Benefit Plans,” the Company is obligated to redeem eligible participants’ interests in their ESOP accounts for cash upon an employee’s election. All shares held by the ESOP are eventually redeemable in the future for cash at the option of the holder once vesting and eligibility requirements have been met. The Company presents all shares held by the ESOP as temporary equity on the consolidated balance sheets at their redemption value. At December 31, 2018 and September 30, 2019, 78,172,809 shares and 78,138,602 shares, respectively, of the Company’s stock were held by the ESOP which the Company recorded at their aggregate redemption values of $1.9 billion and $2.6 billion, respectively.The December 31, 2018 redemption values is based on a share price established by the ESOP trustee, taking into account, among other things, the advice of a third-party valuation consultant for the ESOP trustee as well as the ESOP trustee’s knowledge of the Company. The share price valuation was determined using a combination of income and market-based methods that utilized unobservable Level 3 inputs, including significant assumptions such as forecasted revenue and operating margins, working capital requirements, and weighted average cost of capital. The September 30, 2019 redemption value is based on the Company’s closing share price in an active market and therefore has been classified as Level 1.

The following tables present a reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3) (in thousands):

Balance at December 31, 2018	$	1,876,309
Transfer to Level 1		(1,876,309	)
Balance at September 30, 2019	$	-

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Commitment and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

13. Commitments and Contingencies

The Company is subject to certain lawsuits, claims and assessments that arise in the ordinary course of business. Additionally, the Company has been named as a defendant in lawsuits alleging personal injuries as a result of contact with asbestos products at various project sites. Management believes that any significant costs relating to these claims will be reimbursed by applicable insurance and, although there can be no assurance that these matters will be resolved favorably, management believes that the ultimate resolution of any of these claims will not have a material adverse effect on our consolidated financial position, results of operations, or cash flows. A liability is recorded when it is both probable that a loss has been incurred and the amount of loss or range of loss can be reasonably estimated.  When using a range of loss estimate, the Company records the liability using the low end of the range. The Company records a corresponding receivable for costs covered under its insurance policies.  Management judgment is required to determine the outcome and the estimated amount of a loss related to such matters. Management believes that there are no claims or assessments outstanding which would materially affect the consolidated results of operations or the Company’s financial position.

 On or about March 1, 2017, the Peninsula Corridor Joint Powers Board, or the JPB, filed a lawsuit against Parsons Transportation Group, Inc., or PTG, in the Superior Court of California, County of San Mateo, in connection with a positive train control project on which PTG was engaged prior to termination of its contract by the JPB. PTG had previously filed a lawsuit against the JPB for breach of contract and wrongful termination. The JPB seeks damages in excess of $100.0 million, which the Company is currently disputing. In addition to filing a complaint for breach of contract and wrongful termination, the Company has denied the allegations raised by the JPB and, accordingly, filed affirmative defenses. The Company is currently defending against the JPB’s claims and the parties are still engaged in discovery. The Company also has a professional liability insurance policy to the extent the JPB proves any errors or omissions occurred. At this time, we are unable to determine the probability of the outcome of the litigation or determine a potential range of loss, if any. The Company has also filed a third-party claim against a subcontractor for indemnification in connection with this matter.

In September 2015, a former Parsons employee filed an action in the United States District Court for the Northern District of Alabama against us as a qui tam relator on behalf of the United States (the “Relator”) alleging violation of the False Claims Act. The United States government did not intervene in this matter as it is allowed to do so under the statute. The Company filed a motion to dismiss the lawsuit on the grounds that the Relator did not meet the applicable statute of limitations. The District Court granted the motion to dismiss. The Relator’s attorney appealed the decision to the United States Court of Appeals of the Eleventh Circuit, which ultimately ruled in favor of the Relator, and the Company petitioned the United States Supreme Court to review the decision. The Supreme Court reviewed the decision and accepted the position of the Relator.  The case was thus remanded to the United States District Court for the Northern District of Alabama.  The defendants, including Parsons, will file appropriate pleadings opposing the allegations.   At this time, we are unable to determine the probability of the outcome of the litigation or determine a potential range of loss, if any.

Federal government contracts are subject to audits, which are performed for the most part by the Defense Contract Audit Agency (“DCAA”). Audits by the DCAA and other agencies consist of reviews of our overhead rates, operating systems and cost proposals to ensure that we account for such costs in accordance with the Cost Accounting Standards (“CAS”). If the DCAA determines we have not accounted for such costs in accordance with the CAS, the DCAA may disallow these costs. The disallowance of such costs may result in a reduction of revenue and additional liability for the Company. Historically, the Company has not experienced any material disallowed costs as a result of government audits. However, the Company can provide no assurance that the DCAA or other government audits will not result in material disallowances for incurred costs in the future. All audits of costs incurred on work performed through 2010 have been closed, and years thereafter remain open.

Although there can be no assurance that these matters will be resolved favorably, management believes that their ultimate resolution will not have a material adverse impact on the Company’s consolidated financial position, results of operations, or cash flows.

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Goodwill

9 Months Ended

Sep. 30, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill

7. Goodwill

The following table summarizes the changes in the carrying value of goodwill by reporting segment at December 31, 2018 and September 30, 2019 (in thousands):

	December 31, 2018		Acquisitions		Foreign Exchange		September 30, 2019
Federal Solutions	$	666,841	$	311,860	$	-	$	978,701
Critical Infrastructure		70,097		-		1,279		71,376
Total	$	736,938	$	311,860	$	1,279	$	1,050,077

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Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 28, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net income including noncontrolling interests	$ 61,293	$ 46,066	$ 114,824	$ 225,206
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment, net of tax	171	2,303	4,958	(3,079)
Pension adjustments, net of tax	(9)	10	17	(27)
Comprehensive income including noncontrolling interests, net of tax	61,455	48,379	119,799	222,100
Comprehensive income attributable to noncontrolling interests, net of tax	(4,481)	(4,822)	(8,012)	(10,270)
Comprehensive income attributable to Parsons Corporation, net of tax	$ 56,974	$ 43,557	$ 111,787	$ 211,830

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 04, 2019
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Trading Symbol	PSN
Entity Registrant Name	Parsons Corporation
Entity Central Index Key	0000275880
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		99,262,334
Entity File Number	001-07782
Entity Tax Identification Number	95-3232481
Entity Address, Address Line One	5875 Trinity Parkway #300
Entity Address, City or Town	Centreville
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	20120
City Area Code	(703)
Local Phone Number	988-8500
Title of 12(b) Security	Common Stock, $1 par value
Security Exchange Name	NYSE
Document Quarterly Report	true
Document Transition Report	false
Entity Incorporation, State or Country Code	DE
Entity Interactive Data Current	Yes

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Recently Adopted Accounting Pronouncements

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Recently Adopted Accounting Pronouncements

3. Recently Adopted Accounting Pronouncements

In the first quarter of 2019, the Company adopted Topic 842.  See “Note 6 – Leases” for further discussion of the adoption and the impact on the Company’s financial statements.

In the first quarter of 2019, the Company adopted ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” under which the Company did not elect to reclassify the income tax effects stranded in accumulated other comprehensive income to retained earnings as a result of the enactment of comprehensive tax legislation, commonly referred to as the Tax Cuts and Jobs Act.  As a result, there was no impact on the Company’s financial position, results of operations or cash flows.

On December 30, 2017, the Company adopted ASC 606, “Revenue from Contracts with Customers,” using the modified retrospective method, which provides for a cumulative effect adjustment to retained earnings beginning in fiscal 2018 for those uncompleted contracts impacted by the adoption of the new standard. The difference between the recognition criteria under ASC 606 and our previous recognition practices under ASC 605-35 was recognized through a cumulative adjustment of $4.7 million that was made to the opening balance of accumulated deficit as of December 30, 2017.

In January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the test for goodwill impairment by removing the second step of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance is effective for interim and annual reporting periods beginning after December 15, 2019 and should be applied prospectively with early adoption permitted. The Company early adopted the new standard as of the beginning of fiscal 2018 and its adoption did not have a material impact on the consolidated financial statements.

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Basis of Presentation and Principles of Consolidation

9 Months Ended

Sep. 30, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation and Principles of Consolidation

2. Basis of Presentation and Principles of Consolidation

The accompanying unaudited consolidated financial statements and related notes of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") and pursuant to the interim period reporting requirements of Form 10-Q.  They do not include all of the information and footnotes required by GAAP for complete financial statements and, therefore, should be read in conjunction with our consolidated financial statements and the notes thereto included in the Company’s Form S-1/A filed on April 29, 2019.

In the opinion of management, the consolidated financial statements reflect all normal recurring adjustments necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented.  The results of operations and cash flows for any interim period are not necessarily indicative of results for the full year or for future years.  

This Quarterly Report on Form 10-Q includes the accounts of our wholly-owned subsidiaries, and joint ventures of which we are the primary beneficiary.  The equity method of accounting is applied for the joint ventures in which the Company does not have a controlling interest, but exerts a significant influence (see “Note 15 –Investments in and Advances to Joint Ventures" for further discussion).

In the first quarter of 2019 the Company adopted Accounting Standards Update (‘ASU”) 2016-02, “Leases” (“Topic 842”), using the modified retrospective method.  The new guidance was applied to leases that existed or were entered into on or after January 1, 2019.  The Company’s results for the reporting period beginning January 1, 2019 have been presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with previous guidance.  See “Note 6 – Leases” for further discussion of the adoption and the impact on the Company’s financial statements.

Accumulated Deficit

The Company's accounting policy is to record dividends and accretion of redeemable stock as a reduction of retained earnings. In the absence of retained earnings, the Company will charge the dividends and/or accretion of redeemable stock to Additional Paid-in Capital until depleted and will then charge the remainder to accumulated deficit. As a result of the change in tax status from "S" Corporation to "C" Corporation in the second quarter of 2019, the Company reclassified historical retained earnings for the "S" Corporation from retained earnings to Additional Paid in Capital as of the date of conversion. Subsequent changes in accumulated deficit are related to increases or decreases in the maximum redemption value of redeemable common stock.

Fiscal Periods

In October 2018, our board of directors approved a change in our annual and quarterly fiscal period ends from the last Friday on or before the calendar year or quarterly month-end to the last day of the calendar year or quarterly month-end. Accordingly, the period end for the first, second, and third quarters of fiscal 2018 and fiscal 2019 are March 30, 2018, June 29, 2018, and September 28, 2018, respectively, and March 31, 2019, June 30, 2019, and September 30, 2019, respectively.  The number of days in the three- and nine-month periods ended September 28, 2018 and September 30, 2019 were 91 and 273, respectively, and 92 and 273, respectively.

Use of Estimates

The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates. The Company’s most significant estimates and judgments involve revenue recognition with respect to the determination of the costs to complete contracts and transaction price; determination of self-insurance reserves; valuation of the Company’s fair value of common stock (for periods prior to the IPO); useful lives of property and equipment and intangible assets; calculation of allowance for doubtful accounts; valuation of deferred income tax assets and uncertain tax positions, among others. Please see “Note 2 – Summary of Significant Accounting Policies” of Notes to Consolidated Financial Statements included in the Company’s Form S-1/A filed April 29, 2019, for a discussion of the significant estimates and assumptions affecting our consolidated financial statements.  Estimates of costs to complete contracts are continually evaluated as work progresses and are revised when necessary. When a change in estimate is determined to have an impact on contract profit, the Company records a positive or negative adjustment to the consolidated statement of income.

Inventory

Included in Prepaid expenses and other current assets in the Company’s consolidated balances sheets is inventory.  Inventory consists of uninstalled materials received by the Company awaiting installation at our project sites and raw materials, work-in-process, and finished goods related to the manufacture of advance technology equipment.  Uninstalled materials inventory and the inventory related to advance technology equipment is carried on the Company’s consolidated balance sheets at the lower of cost (which approximates average cost) or net realizable value.

Redeemable Common Stock

In connection with the Company’s IPO on May 8, 2019, all Employee Stock Ownership Plan (“ESOP”) shares were contingently redeemable for cash during the 180-day lock-up period which ended on November 3, 2019.  During the 180-day lock-up period, the Company presented all shares held by the ESOP as temporary equity on the consolidated balance sheets as Redeemable common stock held by Employee Stock Ownership Plan (ESOP) at their redemption value.  The consolidated balance sheet, to be presented in the Company’s 2019 Annual Report on Form 10-K, at December 31, 2019 will reflect the reclassification of redeemable common stock held by the ESOP from temporary equity to permanent equity as the lock-up period expires in the fourth quarter.  At the conclusion of the lock-up period all shares held by the ESOP will be redeemable by participants in shares of the Company’s common stock once vesting and eligibility requirements have been met.  

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Debt and Credit Facilities

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Debt and Credit Facilities

11. Debt and Credit Facilities

Debt consisted of the following (in thousands):

Long-Term:	December 31, 2018			September 30, 2019
Revolving credit facility	$	180,000		$	-
Senior notes		250,000			250,000
Debt issuance costs		(836	)		(694	)
Total long-term	$	429,164		$	249,306

In November 2017, the Company entered into an amended and restated Credit Agreement. The Company incurred $2.0 million of costs in connection with this amendment. Under the agreement, the Company’s revolving credit facility was increased from $500 million to $550 million and the term of the agreement was extended through November 2022. The borrowings under the Credit Agreement bear interest, at the Company’s option, at either the Base Rate (as defined in the Credit Agreement), plus an applicable margin, or LIBOR plus an applicable margin. The applicable margin for Base Rate loans is a range of 0.125% to 1.00% and the applicable margin for LIBOR loans is a range of 1.125% to 2.00%, both based on the leverage ratio of the Company at the end of each fiscal quarter. The rates at December 31, 2018 and September 30, 2019 were 4.253% and 3.350%, respectively. Borrowings under this Credit Agreement are guaranteed by certain of the Company’s operating subsidiaries. Letters of credit commitments outstanding under this agreement aggregated to $49.8 million and $45.2 million at December 31, 2018 and September 30, 2019, respectively, which reduced borrowing limits available to the Company. Interest expense related to the credit agreement was $1.1 million and $6.4 million for the three and nine months ended September 30, 2019, respectively, and for the three and nine months ended September 28, 2018 was $2.5 million and $3.5 million, respectively.

On July 1, 2014, the Company finalized a private placement whereby the Company raised an aggregate amount of $250.0 million in debt repayable as follows (in thousands):

Tranche	Debt Amount		Maturity Date	Interest Rates
Senior Note, Series A	$	50,000	July 15, 2021		4.44	%
Senior Note, Series B		100,000	July 15, 2024		4.98	%
Senior Note, Series C		60,000	July 15, 2026		5.13	%
Senior Note, Series D	$	40,000	July 15, 2029		5.38	%

The Company incurred $1.1 million of debt issuance costs in connection with the private placement. On August 10, 2018, the Company finalized an amended and restated intercreditor agreement related to this private placement to more closely align certain covenants and definitions with the terms under the 2017 amended and restated Credit Agreement and incurred $0.5 million of additional issuance costs. These costs are presented as a direct deduction from the debt on the face of the consolidated balance sheets.  Interest expense related to the Senior Notes for both the three and nine months ended September 28, 2018 and September 30, 2019 was $3.1 million and $9.3 million, respectively. The amortization of debt issuance costs and interest expense are recorded in “Interest expense” on the consolidated statements of income. The Company made interest payments related to the Senior Notes for both the three and nine months ended September 28, 2018 and September 30, 2019 of $6.2 million and $12.4 million, respectively.  Interest payable of $5.7 million and $2.6 million is recorded in “Accrued expenses and other current liabilities” on the consolidated balance sheets at December 31, 2018 and September 30, 2019, respectively, related to the Senior Notes.

The Credit Agreement and private placement includes various covenants, including restrictions on indebtedness, liens, acquisitions, investments or dispositions, payment of dividends and maintenance of certain financial ratios and conditions. The Company was in compliance with these covenants at December 31, 2018 and September 30, 2019.

The Company also has in place several secondary bank credit lines for issuing letters of credit, principally for foreign contracts, to support performance and completion guarantees. Letters of credit commitments outstanding under these bank lines aggregated $223.0 million and $220.6 million at December 31, 2018 and September 30, 2019, respectively.

Using a discounted cash flow technique that incorporates a market interest yield curve with adjustments for duration, optionality, and risk profile, the Company estimated the fair value (level 2) of its senior notes at September 30, 2019 approximates $269.3 million. See “Note 17 – Fair Value of Financial Instruments” for the definition of level 2 of the fair value hierarchy.

In January 2019, the Company borrowed $150.0 million under our Term Loan Agreement to partially finance the OGSystems acquisition.  On May 10, 2019, the Company used proceeds from its May 8, 2019 IPO to repay the $150.0 million outstanding balance under the Term Loan and this loan is now closed. Interest expense related to the term loan was $0 and $2.3 million for the three and nine months ended September 30, 2019, respectively.

Amortization of debt issuance costs for all the Company’s debt and credit facilities for the three months ended September 28, 2018 and September 30, 2019 was $0.2 million and $0.2 million, respectively and $0.5 million and $0.8 million for the nine months ended September 28, 2018 and September 30, 2019, respectively.

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Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Gross Amount and Accumulated Amortization of Intangible Assets

The gross amount and accumulated amortization of intangible assets with finite useful lives included in “Intangible assets, net” on the consolidated balance sheets are as follows (in thousands except for years):

	December 31, 2018							September 30, 2019							Weighted Average
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Amortization Period (in years)
Backlog	$	80,754	$	(58,295	)	$	22,459	$	109,155	$	(80,321	)	$	28,834		3
Customer relationships		121,629		(38,974	)		82,655		226,329		(60,266	)		166,063		7
Leases		670		(561	)		109		670		(576	)		94		5
Developed technology		87,839		(15,174	)		72,665		111,739		(32,545	)		79,194		4
Trade name		3,600		(2,100	)		1,500		8,200		(5,092	)		3,108		1
Non-compete agreements		-		-			-		3,600		(650	)		2,950		3
Other intangibles		275		(145	)		130		1,076		(162	)		914		10
Total intangible assets	$	294,767	$	(115,249	)	$	179,518	$	460,769	$	(179,612	)	$	281,157

Schedule of Estimated Amortization Expense

Estimated amortization expense in each of the next five years and beyond is as follows (in thousands):

	September 30, 2019
2019 (remaining)	$	23,049
2020		83,511
2021		78,778
2022		34,517
2023		22,599
Thereafter		38,703
Total	$	281,157

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Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

Schedule of Consolidated Balance Sheet Related to Services Provided to Unconsolidated Joint Ventures

Amounts included in the consolidated balance sheets related to services the Company provided to unconsolidated joint ventures is as follows (in thousands):

	December 31, 2018		September 30, 2019
Accounts receivable	$	38,742	$	44,637
Contract assets		2,648		2,734
Contract liabilities	$	10,861	$	5,517

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Leases - Summary of Lease Costs (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Leases [Abstract]
Operating lease cost	$ 17,969	$ 53,835
Short-term lease cost	5,429	10,925
Amortization of right-of-use assets	120	455
Interest on lease liabilities	15	46
Sublease income	(712)	(2,727)
Total lease cost	$ 22,821	$ 62,534

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Contracts with Customers - Summary of Changes in Contract Assets and Contract Liabilities (Parenthetical) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Revenue From Contract With Customer [Abstract]
Reversal for provision for contract losses	$ 0	$ 133,180
Increase in revenue recorded in other income		$ 55,100

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Segment Information - Summary of Revenues by Business Lines (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 28, 2018
Segment Reporting Information [Line Items]
Revenues	$ 1,023,277	$ 976,157	$ 2,917,424	$ 2,631,568
Federal Solution Segment
Segment Reporting Information [Line Items]
Revenues	486,175	443,725	1,387,484	1,076,125
Federal Solution Segment | Cyber & Intelligence
Segment Reporting Information [Line Items]
Revenues	90,429	68,895	247,710	177,838
Federal Solution Segment | Defense
Segment Reporting Information [Line Items]
Revenues	144,160	133,259	425,603	297,318
Federal Solution Segment | Mission Solutions
Segment Reporting Information [Line Items]
Revenues	87,936	122,780	237,914	280,902
Federal Solution Segment | Engineered Systems
Segment Reporting Information [Line Items]
Revenues	129,989	118,791	367,542	320,067
Federal Solution Segment | Geospatial
Segment Reporting Information [Line Items]
Revenues	33,661	0	108,715	0
Critical Infrastructure
Segment Reporting Information [Line Items]
Revenues	537,102	532,432	1,529,940	1,555,443
Critical Infrastructure | Connected Communities
Segment Reporting Information [Line Items]
Revenues	151,779	165,529	459,277	491,444
Critical Infrastructure | Mobility Solutions
Segment Reporting Information [Line Items]
Revenues	286,199	300,523	836,779	894,796
Critical Infrastructure | Industrial
Segment Reporting Information [Line Items]
Revenues	$ 99,124	$ 66,380	$ 233,884	$ 169,203

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Fair Value of Financial Instruments - Summary of Redeemable Common Stock Associated with ESOP (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Redeemable common stock	$ 2,577,011	$ 1,876,309
Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Redeemable common stock	2,577,011	0
Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Redeemable common stock	0	0
Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Redeemable common stock	$ 0	$ 1,876,309

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Fair Value of Financial Instruments - Schedule of Reconciliation Fair Value Measurements Using Significant Unobservable Inputs (Details) - Level 3 $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Balance at December 31, 2018	$ 1,876,309
Transfer to Level 1	(1,876,309)
Balance at September 30, 2019	$ 0

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Commitments and Contingencies - Additional Information (Details)		9 Months Ended
	Mar. 01, 2017 USD ($)	Sep. 30, 2019 Claim
Legal Proceedings [Line Items]
Number of claims outstanding | Claim		0
Minimum
Legal Proceedings [Line Items]
Loss contingency damages value | $	$ 100,000,000

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Investments in and Advances to Joint Ventures - Summary of Financial Information for Unconsolidated Joint Ventures (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 28, 2018	Dec. 31, 2018
Schedule Of Equity Method Investments [Line Items]
Current assets	$ 1,474,261		$ 1,474,261		$ 1,488,807
Total assets	3,362,644		3,362,644		2,612,578
Current liabilities	1,156,259		1,156,259		1,006,161
Total liabilities	1,768,193		1,768,193		1,657,345
Total joint venture equity	(1,010,654)		(1,010,654)		(967,537)
Investments in and advances to unconsolidated joint ventures	66,584		66,584		63,560
Revenues	1,023,277	$ 976,157	2,917,424	$ 2,631,568
Costs	798,552	783,018	2,297,512	2,054,201
Net income attributable to Parsons Corporation	56,812	41,222	106,812	214,890
Equity in earnings of unconsolidated joint ventures	7,274	12,707	29,305	25,577
Unconsolidated Joint Ventures
Schedule Of Equity Method Investments [Line Items]
Current assets	778,876		778,876		707,457
Noncurrent assets	956,367		956,367		876,385
Total assets	1,735,243		1,735,243		1,583,842
Current liabilities	625,949		625,949		560,306
Noncurrent liabilities	895,514		895,514		813,269
Total liabilities	1,521,463		1,521,463		1,373,575
Total joint venture equity	213,780		213,780		210,267
Investments in and advances to unconsolidated joint ventures	66,584		66,584		$ 63,560
Revenues	474,600	482,634	1,225,284	1,234,946
Costs	452,001	462,042	1,166,008	1,186,184
Net income attributable to Parsons Corporation	22,599	20,592	59,276	48,762
Equity in earnings of unconsolidated joint ventures	$ 7,274	$ 12,707	$ 29,305	$ 25,577

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Segment Information - Summary of Business Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 28, 2018
Segment Reporting Information [Line Items]
Total revenue	$ 1,023,277	$ 976,157	$ 2,917,424	$ 2,631,568
Federal Solution Segment
Segment Reporting Information [Line Items]
Total revenue	486,175	443,725	1,387,484	1,076,125
Critical Infrastructure
Segment Reporting Information [Line Items]
Total revenue	$ 537,102	$ 532,432	$ 1,529,940	$ 1,555,443

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Acquisitions - Additional Information (Details) - USD ($) $ in Thousands				3 Months Ended		9 Months Ended			12 Months Ended
	Jul. 31, 2019	Jan. 07, 2019	May 31, 2018	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 30, 2018	Sep. 28, 2018	Dec. 31, 2018
Business Acquisition [Line Items]
Amortization of intangible assets				$ 22,100	$ 14,800	$ 64,500	$ 22,700
Goodwill				1,050,077		1,050,077			$ 736,938
Revenues				1,023,277	976,157	2,917,424		$ 2,631,568
Polaris Alpha
Business Acquisition [Line Items]
Percentage of ownership interest acquired			100.00%
Cash paid to acquire			$ 489,100
Borrowed under credit agreement to partially fund the acquisition			260,000
Amortization of intangible assets				13,200	13,000	41,200		17,300
Goodwill			$ 243,471	243,500		243,500
Goodwill deductible for tax purposes				50,100		50,100
Revenues				96,900	$ 94,800	293,000		$ 124,700
Polaris Alpha | Indirect, General and Administrative Expense
Business Acquisition [Line Items]
Acquisition related expenses									$ 6,200
OGSystems
Business Acquisition [Line Items]
Percentage of ownership interest acquired		100.00%
Cash paid to acquire		$ 292,400
Borrowed under credit agreement to partially fund the acquisition		110,000
Amortization of intangible assets		0		5,900		17,800
Goodwill		183,540
Goodwill deductible for tax purposes		16,000
Revenues				33,700		108,700
OGSystems | Term Loan
Business Acquisition [Line Items]
Borrowed under credit agreement to partially fund the acquisition		$ 150,000
OGSystems | Indirect, General and Administrative Expense
Business Acquisition [Line Items]
Acquisition related expenses				600		5,500
QRC Technologies
Business Acquisition [Line Items]
Percentage of ownership interest acquired	100.00%
Cash paid to acquire	$ 214,100
Amortization of intangible assets				1,900		1,900
Goodwill	128,387
Revenues				5,600		5,600
QRC Technologies | Revolving Credit Facility
Business Acquisition [Line Items]
Borrowed under credit agreement to partially fund the acquisition	$ 140,000
QRC Technologies | Indirect, General and Administrative Expense
Business Acquisition [Line Items]
Acquisition related expenses				$ 4,700		$ 4,700

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Contracts with Customers - Summary of Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 28, 2018
Disaggregation Of Revenue [Line Items]
Revenues	$ 1,023,277	$ 976,157	$ 2,917,424	$ 2,631,568
Fixed-Price
Disaggregation Of Revenue [Line Items]
Revenues	288,316	300,225	850,658	833,224
Time-and-Materials
Disaggregation Of Revenue [Line Items]
Revenues	285,586	254,435	810,656	732,555
Cost-Plus
Disaggregation Of Revenue [Line Items]
Revenues	$ 449,375	$ 421,497	$ 1,256,110	$ 1,065,789

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Property and Equipment, Net (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Property Plant And Equipment [Line Items]
Accumulated depreciation	$ (227,776)	$ (204,533)
Property and equipment, net	109,238	91,849
Buildings and Leasehold Improvements
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 71,698	54,348
Buildings and Leasehold Improvements | Minimum [Member]
Property Plant And Equipment [Line Items]
Useful lives (years)	1 year
Buildings and Leasehold Improvements | Maximum [Member]
Property Plant And Equipment [Line Items]
Useful lives (years)	15 years
Furniture and Equipment
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 85,322	81,705
Furniture and Equipment | Minimum [Member]
Property Plant And Equipment [Line Items]
Useful lives (years)	3 years
Furniture and Equipment | Maximum [Member]
Property Plant And Equipment [Line Items]
Useful lives (years)	10 years
Computer Systems and Equipment
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 168,241	148,255
Computer Systems and Equipment | Minimum [Member]
Property Plant And Equipment [Line Items]
Useful lives (years)	3 years
Computer Systems and Equipment | Maximum [Member]
Property Plant And Equipment [Line Items]
Useful lives (years)	10 years
Construction Equipment
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 11,753	$ 12,074
Construction Equipment | Minimum [Member]
Property Plant And Equipment [Line Items]
Useful lives (years)	5 years
Construction Equipment | Maximum [Member]
Property Plant And Equipment [Line Items]
Useful lives (years)	7 years

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Goodwill - Summary of Changes in Carrying Value of Goodwill by Reporting Segment (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Goodwill [Line Items]
Beginning Balance	$ 736,938
Acquisitions	311,860
Foreign Exchange	1,279
Ending Balance	1,050,077
Federal Solutions
Goodwill [Line Items]
Beginning Balance	666,841
Acquisitions	311,860
Foreign Exchange	0
Ending Balance	978,701
Critical Infrastructure
Goodwill [Line Items]
Beginning Balance	70,097
Acquisitions	0
Foreign Exchange	1,279
Ending Balance	$ 71,376

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Subsequent Events - Additional Information (Details) - Employee Stock Ownership Plan (“ESOP”) - Subsequent Event - Common Stock $ in Millions	Oct. 14, 2019 USD ($) shares
Subsequent Event [Line Items]
Repurchase of common stock, shares | shares	157,100
Repurchase of common stock | $	$ 5.4

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Debt and Credit Facilities - Additional Information (Details) - USD ($)			3 Months Ended		9 Months Ended
	May 10, 2019	Jul. 01, 2014	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 28, 2018	Jan. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Debt issuance costs incurred			$ 500,000		$ 500,000
Letters of credit outstanding amount			220,600,000		220,600,000			$ 223,000,000
Amortization of debt issue costs			200,000	$ 200,000	802,000	$ 548,000
Term Loan
Debt Instrument [Line Items]
Interest expense			0		2,300,000
Repayment of outstanding balance	$ 150,000,000
Debt Amount							$ 150,000,000
Accrued Expenses and Other Current Liabilities
Debt Instrument [Line Items]
Interest payable			2,600,000		2,600,000			5,700,000
Senior Notes
Debt Instrument [Line Items]
Interest expense			9,300,000	3,100,000	9,300,000	3,100,000
Interest payments			12,400,000	6,200,000	12,400,000	6,200,000
Senior Notes | Level 2
Debt Instrument [Line Items]
Estimated fair value			269,300,000		269,300,000
Private Placement
Debt Instrument [Line Items]
Debt issuance costs incurred			1,100,000		$ 1,100,000
Repayment of outstanding balance		$ 250,000,000
Credit Agreement
Debt Instrument [Line Items]
Amended and restated credit agreement date					Nov. 30, 2017
Debt issuance costs incurred			2,000,000		$ 2,000,000
Revolving credit facility			500,000,000		500,000,000
Increase in revolving credit facility			550,000,000		$ 550,000,000
Credit agreement extended date					Nov. 30, 2022
Letters of credit outstanding amount			45,200,000		$ 45,200,000			$ 49,800,000
Interest expense			$ 1,100,000	$ 2,500,000	$ 6,400,000	$ 3,500,000
Credit Agreement | Minimum
Debt Instrument [Line Items]
Interest rate								4.253%
Credit Agreement | Maximum
Debt Instrument [Line Items]
Interest rate			3.35%		3.35%
Credit Agreement | Base Rate | Minimum
Debt Instrument [Line Items]
Margin interest rate					0.125%
Credit Agreement | Base Rate | Maximum
Debt Instrument [Line Items]
Margin interest rate					1.00%
Credit Agreement | LIBOR | Minimum
Debt Instrument [Line Items]
Margin interest rate					1.125%
Credit Agreement | LIBOR | Maximum
Debt Instrument [Line Items]
Margin interest rate					2.00%

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Segment Information

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Segment Information

19. Segment Information

The Company operates in two reportable segments: Federal Solutions and Critical Infrastructure.

The Federal Solutions segment provides advanced technical solutions to the U.S. government, delivering timely, cost-effective hardware, software and services for mission-critical projects. The segment provides advanced technologies, supporting national security missions in cybersecurity, missile defense, and military facility modernization, logistics support, hazardous material remediation and engineering services.

The Critical Infrastructure segment provides integrated engineering and management services for complex physical and digital infrastructure around the globe. The Critical Infrastructure segment is a technology innovator focused on next generation digital systems and complex structures. Industry leading capabilities in engineering and project management allow the Company to deliver significant value to customers by employing cutting-edge technologies, improving timelines and reducing costs.

The Company defines its reportable segments based on the way the chief operating decision maker (“CODM”), currently its Chairman and Chief Executive Officer, evaluates the performance of each segment and manages the operations of the Company for purposes of allocating resources among the segments. The CODM evaluates segment operating performance using segment Revenue and segment Adjusted EBITDA attributable to Parsons Corporation.

The following table summarizes business segment revenue for the periods presented (in thousands):

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Federal Solutions revenue	$	443,725	$	486,175	$	1,076,125	$	1,387,484
Critical Infrastructure revenue		532,432		537,102		1,555,443		1,529,940
Total revenue	$	976,157	$	1,023,277	$	2,631,568	$	2,917,424

The Company defines Adjusted EBITDA attributable to Parsons Corporation as Adjusted EBITDA excluding Adjusted EBITDA attributable to noncontrolling interests. The Company defines Adjusted EBITDA as net income (loss) attributable to Parsons Corporation, adjusted to include net income (loss) attributable to noncontrolling interests and to exclude interest expense (net of interest income), provision for income taxes, depreciation and amortization and certain other items that are not considered in the evaluation of ongoing operating performance. These other items include net income (loss) attributable to noncontrolling interests, asset impairment charges, income and expense recognized on litigation matters, expenses incurred in connection with acquisitions and other non-recurring transaction costs and expenses related to our prior restructuring. The following table reconciles business segment Adjusted EBITDA attributable to Parsons Corporation to Net Income attributable to Parsons Corporation for the periods presented (in thousands):

	Three Months Ended						Nine Months Ended
Adjusted EBITDA attributable to Parsons Corporation	September 28, 2018			September 30, 2019			September 28, 2018			September 30, 2019
Federal Solutions	$	45,556		$	50,359		$	101,052		$	126,658
Critical Infrastructure		38,006			33,976			80,296			102,177
Adjusted EBITDA attributable to Parsons Corporation		83,562			84,335			181,348			228,835
Adjusted EBITDA attributable to noncontrolling interests		5,002			4,655			10,681			8,384
Depreciation and amortization		(23,599	)		(31,027	)		(46,656	)		(92,692	)
Interest expense, net		(5,589	)		(4,482	)		(12,117	)		(18,448	)
Income tax (expense) benefit		(4,154	)		15,453			(18,526	)		67,063
Litigation-related gains(a)		-			-			129,674			-
Amortization of deferred gain resulting from sale-leaseback transactions(b)		1,798			-			5,440			-
Equity-based compensation		(5,049	)		1,657			(13,198	)		(45,504	)
Transaction-related costs(c)		(2,456	)		(9,891	)		(7,511	)		(26,961	)
Restructuring(d)		-			(309	)		-			(2,880	)
Other(e)		(3,449	)		902			(3,929	)		(2,973	)
Net income including noncontrolling interests		46,066			61,293			225,206			114,824
Net income attributable to noncontrolling interests		4,844			4,481			10,316			8,012
Net income attributable to Parsons Corporation	$	41,222		$	56,812		$	214,890		$	106,812

(a) Reversal of an accrued liability, with $55.1 million recorded to revenue and $74.6 million recorded to other income (“gain associated with claim on long-term contract”) in results of operations, associated with a lawsuit against a joint venture in which the Company is the managing partner.  Please see “Note 14 – Commitments and Contingencies” in the Company’s Form S-1/A filed on April 29, 2019, for a description of this matter, which was resolved in favor of the Company on June 13, 2018.

(b) Reflects recognized deferred gains related to sales-leaseback transactions described in “Note 10 – Sale-Leasebacks.”

(c) Reflects costs incurred in connection with acquisitions, the IPO, and other non-recurring transaction costs, primarily fees paid for professional services and employee retention.

(d) Reflects costs associated with corporate restructuring initiatives.

(e) Includes a combination of gain/loss related to sale of fixed assets, software implementation costs, and other individually insignificant items that are non-recurring in nature.

Asset information by segment is not a key measure of performance used by the CODM.

The following tables presents revenues and property and equipment, net by geographic area (in thousands):

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Revenue
North America	$	805,320	$	849,839	$	2,131,562	$	2,400,124
Middle East		164,677		169,028		485,377		504,604
Rest of World		6,160		4,410		14,629		12,696
Total Revenue	$	976,157	$	1,023,277	$	2,631,568	$	2,917,424

The geographic location of revenue is determined by the location of the customer.  The prior reporting of revenue by geographic location has been conformed to the current presentation.

	December 31, 2018		September 30, 2019
Property and Equipment, Net
North America	$	86,847	$	103,690
Middle East		5,002		5,548
Total Property and Equipment, Net	$	91,849	$	109,238

North America includes revenue in the United States for the three months ended September 28, 2018 and September 30, 2019 of $747.7 million and $774.2 million, respectively, and for the nine months ended September 28, 2018 and September 30, 2019, $2.0 billion and $2.2 billion, respectively. North America property and equipment, net includes $79.9 million and $97.3 million of property and equipment, net in the United States at December 31, 2018 and September 30, 2019, respectively.

The following table presents revenues by business lines (in thousands):

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Revenue
Cyber & Intelligence	$	68,895	$	90,429	$	177,838	$	247,710
Defense		133,259		144,160		297,318		425,603
Mission Solutions		122,780		87,936		280,902		237,914
Engineered Systems		118,791		129,989		320,067		367,542
Geospatial		-		33,661		-		108,715
Federal Solutions revenues		443,725		486,175		1,076,125		1,387,484
Connected Communities		165,529		151,779		491,444		459,277
Mobility Solutions		300,523		286,199		894,796		836,779
Industrial		66,380		99,124		169,203		233,884
Critical Infrastructure revenues		532,432		537,102		1,555,443		1,529,940
Total Revenue	$	976,157	$	1,023,277	$	2,631,568	$	2,917,424

Revenue for the three and nine months ended September 28, 2018 included $55.1 million related to the settlement of a claim that was resolved in favor of the Company in the Mobility Solutions business line of our Critical Infrastructure segment.  Please see “Note 14 – Commitments and Contingencies” in the Company’s Form S-1/A filed on April 29, 2019, for a description of this matter.  Excluding the claim settlement, revenue for the nine months ended September 28, 2018 for the Critical Infrastructure segment was$1.5 billion, respectively and for the Mobility Solutions revenue business line revenue wasand $839.7 million, respectively.

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Investments in and Advances to Joint Ventures

9 Months Ended

Sep. 30, 2019

Equity Method Investments And Joint Ventures [Abstract]

Investments in and Advances to Joint Ventures

15. Investments in and Advances to Joint Ventures

The Company participates in joint ventures to bid, negotiate and complete specific projects. The Company is required to consolidate these joint ventures if it holds the majority voting interest or if the Company meets the criteria under the consolidation model, as described below.

The Company performs an analysis to determine whether its variable interests give the Company a controlling financial interest in a Variable Interest Entity (“VIE”) for which the Company is the primary beneficiary and should, therefore, be consolidated. Such analysis requires the Company to assess whether it has the power to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

The Company analyzed all of its joint ventures and classified them into two groups: (1) joint ventures that must be consolidated because they are either not VIEs and the Company holds the majority voting interest, or because they are VIEs and the Company is the primary beneficiary; and (2) joint ventures that do not need to be consolidated because they are either not VIEs and the Company holds a minority voting interest, or because they are VIEs and the Company is not the primary beneficiary.

Many of the Company’s joint venture agreements provide for capital calls to fund operations, as necessary; however, such funding is infrequent and is not anticipated to be material.

Letters of credit outstanding described in “Note 11 – Debt and Credit Facilities” that relate to project ventures are $76.8 million and $72.4 million at December 31, 2018 and September 30, 2019, respectively.

In the table below, aggregated financial information relating to the Company’s joint ventures is provided because their nature, risk and reward characteristics are similar. None of the Company’s current joint ventures that meet the characteristics of a VIE are individually significant to the consolidated financial statements.

Consolidated Joint Ventures

The following represents financial information for consolidated joint ventures included in the consolidated financial statements (in thousands):

	December 31, 2018		September 30, 2019
Current assets	$	287,227	$	254,204
Noncurrent assets		2,689		2,836
Total assets		289,916		257,040
Current liabilities		199,833		198,079
Total liabilities		199,833		198,079
Total joint venture equity	$	90,083	$	58,961

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Revenue	$	126,480	$	117,611	$	413,548	$	341,719
Costs		116,468		108,839		262,146		322,826
Net income	$	10,012	$	8,772	$	151,402	$	18,893
Net income attributable to noncontrolling interests	$	4,844	$	4,481	$	10,316	$	8,012

The assets of the consolidated joint ventures are restricted for use only by the particular joint venture and are not available for the Company’s general operations.

Unconsolidated Joint Ventures

The Company accounts for its unconsolidated joint ventures using the equity method of accounting. Under this method, the Company recognizes its proportionate share of the net earnings of these joint ventures as “Equity in earnings (loss) of unconsolidated joint ventures” in the consolidated statements of income. The Company’s maximum exposure to loss as a result of its investments in unconsolidated VIEs is typically limited to the aggregate of the carrying value of the investment and future funding commitments.

The following represents the financial information of the Company’s unconsolidated joint ventures as presented in their unaudited financial statements (in thousands):

	December 31, 2018		September 30, 2019
Current assets	$	707,457	$	778,876
Noncurrent assets		876,385		956,367
Total assets		1,583,842		1,735,243
Current liabilities		560,306		625,949
Noncurrent liabilities		813,269		895,514
Total liabilities		1,373,575		1,521,463
Total joint venture equity		210,267		213,780
Investments in and advances to unconsolidated joint ventures	$	63,560	$	66,584

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Revenue	$	482,634	$	474,600	$	1,234,946	$	1,225,284
Costs		462,042		452,001		1,186,184		1,166,008
Net income	$	20,592	$	22,599	$	48,762	$	59,276
Equity in earnings of unconsolidated joint ventures	$	12,707	$	7,274	$	25,577	$	29,305

The Company received net distributions from (made contributions to) its unconsolidated joint ventures for the three months ended September 28, 2018 and September 30, 2019 of $20.1 million and $13.7 million, respectively, and $28.6 million and $28.0 million for the nine months ended September 28, 2018 and September 30, 2019, respectively.

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Recently Adopted Accounting Pronouncements - Additional Information (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Dec. 30, 2017
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Retained earnings	$ (64,896)	$ 12,445
Difference between Revenue Guidance in Effect before and after Topic 606 | ASC 606
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Retained earnings			$ 4,700

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Acquisitions - Schedule of Supplemental Pro Forma Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 28, 2018
Polaris Alpha
Business Acquisition [Line Items]
Pro forma revenue		$ 976,157		$ 2,784,864
Pro forma net income including noncontrolling interests		46,848		179,071
OGSystems
Business Acquisition [Line Items]
Pro forma revenue	$ 1,023,277	1,007,793	$ 2,919,379	2,715,572
Pro forma net income including noncontrolling interests	61,293	39,224	118,896	196,905
QRC Technologies
Business Acquisition [Line Items]
Pro forma revenue	1,026,831	987,343	2,938,973	2,657,105
Pro forma net income including noncontrolling interests	$ 65,782	$ 44,944	$ 117,399	$ 212,728

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Debt and Credit Facilities - Schedule of Aggregate Amount Debt Repayable (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Senior Note, Series A
Debt Instrument [Line Items]
Debt Amount	$ 50,000
Maturity Date	Jul. 15, 2021
Interest Rates	4.44%
Senior Note, Series B
Debt Instrument [Line Items]
Debt Amount	$ 100,000
Maturity Date	Jul. 15, 2024
Interest Rates	4.98%
Senior Note, Series C
Debt Instrument [Line Items]
Debt Amount	$ 60,000
Maturity Date	Jul. 15, 2026
Interest Rates	5.13%
Senior Note, Series D
Debt Instrument [Line Items]
Debt Amount	$ 40,000
Maturity Date	Jul. 15, 2029
Interest Rates	5.38%

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Property and Equipment, Net - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 28, 2018
Property Plant And Equipment [Abstract]
Depreciation expense	$ 8.9	$ 8.8	$ 28.2	$ 24.0

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Intangible Assets - Schedule of Gross Amount and Accumulated Amortization of Intangible Assets (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 460,769	$ 294,767
Accumulated Amortization	(179,612)	(115,249)
Net Carrying Amount	281,157	179,518
Backlog
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	109,155	80,754
Accumulated Amortization	(80,321)	(58,295)
Net Carrying Amount	$ 28,834	22,459
Amortization Period (in years)	3 years
Customer Relationships
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 226,329	121,629
Accumulated Amortization	(60,266)	(38,974)
Net Carrying Amount	$ 166,063	82,655
Amortization Period (in years)	7 years
Leases
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 670	670
Accumulated Amortization	(576)	(561)
Net Carrying Amount	$ 94	109
Amortization Period (in years)	5 years
Developed Technology
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 111,739	87,839
Accumulated Amortization	(32,545)	(15,174)
Net Carrying Amount	$ 79,194	72,665
Amortization Period (in years)	4 years
Trade Name
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 8,200	3,600
Accumulated Amortization	(5,092)	(2,100)
Net Carrying Amount	$ 3,108	1,500
Amortization Period (in years)	1 year
Non compete Agreements
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 3,600	0
Accumulated Amortization	(650)	0
Net Carrying Amount	$ 2,950	0
Amortization Period (in years)	3 years
Other Intangibles
Acquired Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,076	275
Accumulated Amortization	(162)	(145)
Net Carrying Amount	$ 914	$ 130
Amortization Period (in years)	10 years

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Subsequent Events

9 Months Ended

Sep. 30, 2019

Subsequent Events [Abstract]

Subsequent Events

20. Subsequent Events

On October 14, 2019, the Board of Directors of the Company approved the repurchase by the Company of shares of its Common Stock pursuant to the Company’s ESOP.  The ESOP provides that, if, prior to the expiration of the lock-up period in connection with the Company’s initial public offering, the trust administering the ESOP has insufficient cash to fund all requested distributions, then, with respect to any distribution election received after the date the ESOP trustee determines it will no longer have sufficient cash to fund all requested distributions during the lock-up period, and provides at least 10 business days' written notice to the Company of such determination, the Company shall automatically, and without further action by the Company or the ESOP trustee, repurchase such number of shares of the Company's Common Stock held by the trust as is subject to any such election.  The Company repurchased approximately 157,100 shares of its Common Stock for approximately $5.4 million.  Pursuant to expiration of the lock-up period, the ESOP will commence regular distributions of shares to brokerage accounts of retired participants who have met the requirements for distribution.

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Related Party Transactions

9 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

Related Party Transactions

16. Related Party Transactions

The Company often provides services to unconsolidated joint ventures and revenues include amounts related to recovering overhead costs for these services. Revenues related to services the Company provided to unconsolidated joint ventures for the three months ended September 28, 2018 and September 30, 2019, were $36.6 million and $28.8 million, respectively, and for the nine months ended September 28, 2018 and September 30, 2019, were $112.2 million and $113.1 million, respectively. For the three months ended September 28, 2018 and September 30, 2019, the Company incurred $28.2 millionand $20.5 million, respectively and for the nine months ended September 28, 2019 and September 30, 2019, $85.2 million and $86.3 million, respectively of reimbursable costs. Amounts included in the consolidated balance sheets related to services the Company provided to unconsolidated joint ventures is as follows (in thousands):

	December 31, 2018		September 30, 2019
Accounts receivable	$	38,742	$	44,637
Contract assets		2,648		2,734
Contract liabilities	$	10,861	$	5,517

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Description of Operations

9 Months Ended

Sep. 30, 2019

Description Of Operations Disclosure [Abstract]

Description of Operations

1. Description of Operations

Organization

Parsons Corporation, a Delaware corporation, and its subsidiaries (collectively, the “Company”) provide sophisticated design, engineering and technical services, and smart and agile software to the United States federal government and Critical Infrastructure customers worldwide. The Company performs work in various foreign countries through local subsidiaries, joint ventures and foreign offices maintained to carry out specific projects.

Initial Public Offering

On May 8, 2019, the Company consummated its initial public offering (“IPO”) whereby the Company sold 18,518,500 shares of common stock for $27.00 per share.  The underwriters exercised their share option on May 14, 2019 to purchase an additional 2,777,775 shares at the share price of $25.515 which was the IPO share price of $27.00 less the underwriting discount of $1.485 per share.  The net proceeds of the IPO and the underwriters’ share option were $536.9 million, after deducting underwriting discounts and other fees, and were used to fund an IPO dividend of $52.1 million, repay the outstanding balance of $150.0 million under our Term Loan, and repay outstanding indebtedness under our Revolving Credit Facility.

Stock Dividend

On April 15, 2019, the board of directors of the Company declared a common stock dividend in a ratio of two shares of common stock for every one share of common stock presently held by the Company’s stockholder (the “Stock Dividend”). The record date of this common Stock Dividend, which the Company refers to as the Stock Dividend was May 7, 2019, the day immediately prior to the consummation of the Company’s IPO on May 8, 2019, and the payment date of the Stock Dividend was May 8, 2019. Purchasers of the Company’s common stock in the Company’s public offering were not entitled to receive any portion of the Stock Dividend.

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Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

Historically, the Company had elected to be taxed under the provisions of Subchapter “S” of the Internal Revenue Code for federal tax purposes. As a result, income had not been subject to U.S. federal income taxes or state income taxes in those states where the “S” Corporation status is recognized. Therefore, previously, no provision or liability for federal or state income tax had been provided in the consolidated financial statements except for those states where the “S” Corporation status was not recognized, or where states imposed a tax on “S” Corporations. The provision for income tax in the historical periods prior to the IPO consists of these state taxes and taxes from certain foreign taxes where the Company is subject to tax.

In connection with the Company’s IPO on May 8, 2019, the “S” Corporation status was terminated, and the Company is now treated as a “C” Corporation under the Code. The termination of the “S” Corporation election has had a material impact on the Company’s results of operations, financial condition, and cash flows as reflected in the June 30 and September 30, 2019 consolidated financial statements. The effective income tax rate has increased and net income has decreased as compared to the Company’s “S” Corporation tax years, since the Company is now subject to both U.S. federal and state corporate income taxes on its earnings.

For US corporate income tax purposes, the Company will apportion its 2019 taxable income ratably between the “S” Corporation and “C” Corporation periods, as allowed by law.  This allocation of income will effectively result in a blended income tax rate for the 2019 year, as only the C corporation earnings will be subject to both U.S. federal and state corporate income tax while the “S” Corporation earnings will be subject to tax in those states that tax “S” Corporations or do not recognize “S” Corporation status. The Company has estimated our 2019 effective tax benefit rate to be (69.69)%.  The most significant item contributing to the difference between the effective rate and the statutory U.S. Federal income tax rate of 21.0% for the quarter ended September 30, 2019 is the tax impact of updating the revaluation of deferred tax assets and liabilities, resulting from the conversion from an “S” to a “C” Corporation.

   The termination for the “S” Corporation status has been treated as a change in tax status under Accounting Standards Codification 740, “Income Taxes”. These rules require that the deferred tax effects of a change in tax status be recorded to income from continuing operations on the date the “S” Corporation status terminates. During the quarter ended June 30, 2019 the Company recorded a discrete deferred tax benefit of $56 million for the estimated effect of the change in tax status, relating to the recognition of net deferred tax assets for temporary differences in existence on the date of conversion to a “C” Corporation. During the quarter ended September 30, 2019, the Company has updated the estimate to $85 million, representing an increase in expected benefit of $29 million. The update primarily relates to a change in the forecasted temporary differences as of the conversion, changes in deferred tax assets resulting from 2018 tax return-to-provision adjustments, and changes in tax accounting methods that were made with the 2018 tax return during the third quarter. This amount is subject to additional revision based upon actual results for the current year.The $29 million increase was recorded as a discrete tax benefit in the three months ended September 30, 2019.

The US government enacted comprehensive tax legislation on December 22, 2017, which is commonly referred to as the Tax Cuts and Jobs Act ("TCJA"). The TCJA significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective January 1, 2018. The TCJA also repealed the deduction for domestic production activities, limited the deductibility of certain executive compensation, and implemented a modified territorial tax system with the introduction of the Global Intangible Low-Taxed Income (“GILTI”) tax rules. The TCJA also imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries. As a Subchapter “S” corporation the TCJA had a limited effect on the Company’s 2018 effective tax rate. The Company calculated that as a “C” corporation in 2019, the provisions of TCJA, except for the statutory rate, will not have a material impact on the income tax provision.   Under GAAP, the Company is allowed to make an accounting policy election of either: (i) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost ” method); or (ii) factoring such amounts into the Company’s measurement of its deferred taxes (the “deferred” method).   For taxable income inclusions due to the GILTI tax rules, the Company has elected the period cost method and has included the impact in the estimated annual effective tax rate as of September 30, 2019.

As of September 30, 2019, the Company’s deferred tax assets included a valuation allowance of $18.1 million primarily related to foreign net operating loss carryforwards, foreign tax credit carryforwards, and capital losses that the Company determined are not more likely than not to be realized. The factors used to assess the likelihood of realization were the past performance of the related entities, forecasts of future taxable income, future reversals of existing taxable temporary differences, and available tax planning strategies that could be implemented to realize the deferred tax assets. The ability or failure to achieve the forecasted taxable income in these entities could affect the ultimate realization of deferred tax assets.

As of December 31,2018 and September 30, 2019, the liability for income taxes associated with uncertain tax positions was $9.9 million and $14.6 million, respectively.  Management believes it is unlikely that the liability for unrecognized tax benefits related to existing matters would increase or decrease within the next 12 months by a material amount.  The Company is routinely subject to tax audit in several jurisdictions.  Although adjustments could result from these audits, the Company is not aware of any issue that would materially change the liability for uncertain tax positions.

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Intangible Assets

9 Months Ended

Sep. 30, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets

8. Intangible Assets

The gross amount and accumulated amortization of intangible assets with finite useful lives included in “Intangible assets, net” on the consolidated balance sheets are as follows (in thousands except for years):

	December 31, 2018							September 30, 2019							Weighted Average
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Amortization Period (in years)
Backlog	$	80,754	$	(58,295	)	$	22,459	$	109,155	$	(80,321	)	$	28,834		3
Customer relationships		121,629		(38,974	)		82,655		226,329		(60,266	)		166,063		7
Leases		670		(561	)		109		670		(576	)		94		5
Developed technology		87,839		(15,174	)		72,665		111,739		(32,545	)		79,194		4
Trade name		3,600		(2,100	)		1,500		8,200		(5,092	)		3,108		1
Non-compete agreements		-		-			-		3,600		(650	)		2,950		3
Other intangibles		275		(145	)		130		1,076		(162	)		914		10
Total intangible assets	$	294,767	$	(115,249	)	$	179,518	$	460,769	$	(179,612	)	$	281,157

The aggregate amortization expense of intangible assets for the three months ended September 28, 2018 and September 30, 2019 was $14.8 million and $22.1 million, respectively, and for the nine months ended September 30, 2018 and September 30, 2019 was $22.7 million and $64.5 million, respectively.

Estimated amortization expense in each of the next five years and beyond is as follows (in thousands):

	September 30, 2019
2019 (remaining)	$	23,049
2020		83,511
2021		78,778
2022		34,517
2023		22,599
Thereafter		38,703
Total	$	281,157

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Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 28, 2018
Income Statement [Abstract]
Revenues	$ 1,023,277	$ 976,157	$ 2,917,424	$ 2,631,568
Direct costs of contracts	798,552	783,018	2,297,512	2,054,201
Equity in earnings of unconsolidated joint ventures	7,274	12,707	29,305	25,577
Indirect, general and administrative expenses	178,550	150,733	581,428	422,028
Operating income	53,449	55,113	67,789	180,916
Interest income	427	351	1,129	2,358
Interest expense	(4,909)	(5,940)	(19,577)	(14,475)
Other income (expense), net	(3,127)	696	(1,580)	355
Gain associated with claim on long-term contract	0	0	0	74,578
Total other income (expense)	(7,609)	(4,893)	(20,028)	62,816
Income before income tax provision	45,840	50,220	47,761	243,732
Income tax benefit (provision)	15,453	(4,154)	67,063	(18,526)
Net income including noncontrolling interests	61,293	46,066	114,824	225,206
Net income attributable to noncontrolling interests	(4,481)	(4,844)	(8,012)	(10,316)
Net income attributable to Parsons Corporation	$ 56,812	$ 41,222	$ 106,812	$ 214,890
Earnings per share:
Basic and diluted	$ 0.57	$ 0.52	$ 1.19	$ 2.66

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Acquisitions

9 Months Ended

Sep. 30, 2019

Business Combinations [Abstract]

Acquisitions

4. Acquisitions

Polaris Alpha

On May 31, 2018, the Company acquired a 100% ownership interest in Polaris Alpha, a privately owned, advanced technology-focused provider of innovative mission solutions for complex defense, intelligence, and security customers, as well as other U.S. federal government customers, for $489.1 million paid in cash. The Company borrowed $260 million under the credit agreement, as described in “Note 11 – Debt and Credit Facilities,” to partially fund the acquisition. In connection with this acquisition, the Company recognized $6.2 million of acquisition-related expenses in “Indirect, general and administrative expense” in the consolidated statements of income for the fiscal year ended December 31, 2018, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. Polaris Alpha enhances the Company’s artificial intelligence and data analytics expertise with new technologies and solutions. Customers of both companies will benefit from existing, complementary technologies and increased scale, enabling end-to-end solutions under the shared vision of rapid prototyping and agile development.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed (in thousands):

	Amount
Cash and cash equivalents	$	7,914
Accounts receivable		29,688
Contract assets		35,229
Prepaid expenses and other current assets		9,295
Property and equipment		9,024
Goodwill		243,471
Intangible assets		199,520
Other noncurrent assets		2,203
Accounts payable		(13,942	)
Accrued expenses and other current liabilities		(26,419	)
Contract liabilities		(3,529	)
Deferred tax liabilities		(2,231	)
Other long-term liabilities		(1,146	)
Net assets acquired	$	489,077

Of the total purchase price, the following values were assigned to intangible assets (in thousands, except for years):

	Gross Carrying Amount		Amortization Period
			(in years)
Developed technology	$	84,900	4
Customer relationships		76,000	8
Backlog		34,900	2
Trade name		3,600	1
Leases	$	120	6

Amortization expense of $13.0 million and $13.2 million related to these intangible assets was recorded for the three months ended September 28, 2018 and September 30, 2019, respectively, and $17.3 million and $41.2 million for the nine months ended September 28, 2018 and September 30, 2019, respectively. The entire value of goodwill of $243.5 million was assigned to the Parsons Federal reporting unit and represents synergies expected to be realized from this business combination. Goodwill of $50.1 million isdeductible for tax purposes.

The amount of revenue generated by Polaris Alpha and included within consolidated revenues is $94.8 million and $96.9 million for the three months ended September 28, 2018 and September 30, 2019, respectively, and $124.7 million and $293.0 million for the nine months ended September 28, 2018 and September 30, 2019, respectively. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition.

Supplemental Pro Forma Information

Supplemental information on an unaudited pro forma operating results assuming the Polaris Alpha acquisition had been consummated as of the beginning of fiscal year 2018 (December 31, 2017) (in thousands) is as follows:

	Three Months Ended		Nine Months Ended
	September 28, 2018		September 28, 2018
Pro forma revenue	$	976,157	$	2,784,864
Pro forma net income including noncontrolling interests	$	46,848	$	179,071

The unaudited pro forma supplemental information is based on estimates and assumptions which the Company believes are reasonable and reflects the pro forma impact of additional amortization related to the fair value of acquired intangible assets, pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses and the additional pro forma interest expense related to the borrowings under the credit agreement as of the assumed acquisition date. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been consummated during the periods for which pro forma information is presented.

OGSystems

On January 7, 2019, the Company acquired a 100% ownership interest in OGSystems, a privately owned company, for $292.4 million paid in cash. OGSystems provides geospatial intelligence, big data analytics and threat mitigation for defense and intelligence customers.  The Company borrowed $110 million under the credit agreement and $150 million on a short-term loan, as described in “Note 11 – Debt and Credit Facilities,” to partially fund the acquisition. In connection with this acquisition, the Company recognized $0.6 million and $5.5 million of acquisition-related expenses in “Indirect, general and administrative expense” in the consolidated statements of income for the three and nine months ended September 30, 2019, respectively, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. OGSystems enhances the Company’s artificial intelligence and data analytics expertise with new technologies and solutions. Customers of both companies will benefit from existing, complementary technologies and increased scale, enabling end-to-end solutions under the shared vision of rapid prototyping and agile development.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed based on the preliminary purchase price allocation as of the date of acquisition (in thousands):

	Amount
Cash and cash equivalents	$	5,772
Accounts receivable		9,904
Contract assets		9,747
Prepaid expenses and other current assets		4,307
Property and equipment		4,085
Right of use assets, operating leases		8,826
Goodwill		183,540
Intangible assets		92,300
Other noncurrent assets		10
Accounts payable		(5,450	)
Accrued expenses and other current liabilities		(7,147	)
Contract liabilities		(1,300	)
Short-term lease liabilities, operating leases		(805	)
Income tax payable		(1,469	)
Deferred tax liabilities		(904	)
Long-term lease liabilities, operating leases		(8,021	)
Other long-term liabilities		(1,015	)
Net assets acquired	$	292,380

Of the total purchase price, the following values were assigned to intangible assets (in thousands, except for years):

	Gross Carrying Amount		Amortization Period
			(in years)
Customer relationships	$	57,100	5
Backlog		27,700	3
Trade name		3,800	2
Non-compete agreements		2,400	3
Developed technologies	$	1,300	3

The Company is still in the process of finalizing its valuation of developed technology acquired.

Amortization expense of $5.9 million and $17.8 million related to these intangible assets was recorded for the three and nine months ended September 30, 2019, respectively. The entire value of goodwill of $183.5 million was assigned to the Parsons Federal reporting unit and represents synergies expected to be realized from this business combination. Goodwill of $16.0 million is deductible for tax purposes.

The amount of revenue generated by OGSystems since the acquisition and included within consolidated revenues for the three and nine months ended September 30, 2019 is $33.7 million and $108.7 million, respectively. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition.

Supplemental Pro Forma Information

Supplemental information on an unaudited pro forma operating results assuming the OGSystems acquisition had been consummated as of the beginning of fiscal year 2018 (December 31, 2017) (in thousands) is as follows:

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Pro forma revenue	$	1,007,793	$	1,023,277	$	2,715,572	$	2,919,379
Pro forma net income including noncontrolling interests	$	39,224	$	61,293	$	196,905	$	118,896

The unaudited pro forma supplemental information is based on estimates and assumptions which the Company believes are reasonable and reflects the pro forma impact of additional amortization related to the fair value of acquired intangible assets, pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses and the additional pro forma interest expense related to the borrowings under the credit agreement as of the assumed acquisition date. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been consummated during the periods for which pro forma information is presented.

QRC Technologies

On July 31, 2019 the Company acquired a 100% ownership interest in QRC Technologies (“QRC”), a privately owned company, for $214.1 million in cash.  QRC provides design and development of open-architecture radio-frequency products.  The company borrowed $140.0 million under the Revolving Credit Facility to partially fund the transaction. In connection with this acquisition, the Company recognized $4.7 million of acquisition-related expenses in “Indirect, general and administrative expense” in the consolidated statements of income for the three and nine months ended September 30, 2019 including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. QRC is an agile, disruptive product company that specializes in radio frequency spectrum survey, record and playback; signals intelligence; and electronic warfare missions. QRC complements our existing portfolio, increases our presence in the high-growth markets of spectrum awareness and surveillance, adds critical intellectual property that complements and expands our available capabilities for the Special Operations and Intelligence Communities.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed based on the preliminary purchase price allocation as of the date of acquisition (in thousands):

	Amount
Cash and cash equivalents	$	5,925
Accounts receivable		5,587
Prepaid expenses and other current assets		5,467
Property and equipment		1,205
Right of use assets, operating leases		5,228
Goodwill		128,387
Intangible assets		72,900
Accounts payable		(1,567	)
Accrued expenses and other current liabilities		(3,771	)
Short-term lease liabilities, operating leases		(545	)
Long-term lease liabilities, operating leases		(4,683	)
Net assets acquired	$	214,133

Of the total purchase price, the following values were assigned to intangible assets (in thousands, except for years):

	Gross Carrying Amount		Amortization Period
			(in years)
Customer relationships	$	47,600	12
Backlog		700	1
Trade name		800	2
Non-compete agreements		1,200	4
Developed technologies	$	22,600	3-5

The Company is still in the process of finalizing its valuation of the net assets acquired.

Amortization expense of $1.9 million related to these intangible assets was recorded for the three and nine months ended September 30, 2019, respectively. The entire value of goodwill of $128.4 million was assigned to the Parsons Federal reporting unit and represents synergies expected to be realized from this business combination. Goodwill in it’s entirety is deductible for tax purposes.

The amount of revenue generated by QRC since the acquisition and included within consolidated revenues for both the three and nine months ended September 30, 2019 is $5.6 million. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition.

Supplemental Pro Forma Information

Supplemental information on an unaudited pro forma operating results assuming the QRC Technologies acquisition had been consummated as of the beginning of fiscal year 2018 (December 31, 2017) (in thousands) is as follows:

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Pro forma revenue	$	987,343	$	1,026,831	$	2,657,105	$	2,938,973
Pro forma net income including noncontrolling interests	$	44,944	$	65,782	$	212,728	$	117,399

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Goodwill (Tables)

9 Months Ended

Sep. 30, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Summary of Changes in Carrying Value of Goodwill by Reporting Segment

The following table summarizes the changes in the carrying value of goodwill by reporting segment at December 31, 2018 and September 30, 2019 (in thousands):

	December 31, 2018		Acquisitions		Foreign Exchange		September 30, 2019
Federal Solutions	$	666,841	$	311,860	$	-	$	978,701
Critical Infrastructure		70,097		-		1,279		71,376
Total	$	736,938	$	311,860	$	1,279	$	1,050,077

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Investments in and Advances to Joint Ventures (Tables)

9 Months Ended

Sep. 30, 2019

Equity Method Investments And Joint Ventures [Abstract]

Summary of Financial Information for Consolidated Joint Ventures

The following represents financial information for consolidated joint ventures included in the consolidated financial statements (in thousands):

	December 31, 2018		September 30, 2019
Current assets	$	287,227	$	254,204
Noncurrent assets		2,689		2,836
Total assets		289,916		257,040
Current liabilities		199,833		198,079
Total liabilities		199,833		198,079
Total joint venture equity	$	90,083	$	58,961

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Revenue	$	126,480	$	117,611	$	413,548	$	341,719
Costs		116,468		108,839		262,146		322,826
Net income	$	10,012	$	8,772	$	151,402	$	18,893
Net income attributable to noncontrolling interests	$	4,844	$	4,481	$	10,316	$	8,012

Summary of Financial Information for Unconsolidated Joint Ventures

The following represents the financial information of the Company’s unconsolidated joint ventures as presented in their unaudited financial statements (in thousands):

	December 31, 2018		September 30, 2019
Current assets	$	707,457	$	778,876
Noncurrent assets		876,385		956,367
Total assets		1,583,842		1,735,243
Current liabilities		560,306		625,949
Noncurrent liabilities		813,269		895,514
Total liabilities		1,373,575		1,521,463
Total joint venture equity		210,267		213,780
Investments in and advances to unconsolidated joint ventures	$	63,560	$	66,584

	Three Months Ended				Nine Months Ended
	September 28, 2018		September 30, 2019		September 28, 2018		September 30, 2019
Revenue	$	482,634	$	474,600	$	1,234,946	$	1,225,284
Costs		462,042		452,001		1,186,184		1,166,008
Net income	$	20,592	$	22,599	$	48,762	$	59,276
Equity in earnings of unconsolidated joint ventures	$	12,707	$	7,274	$	25,577	$	29,305

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Leases - Schedule of Supplemental Cash Flow Information Related to Leases (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Leases [Abstract]
Operating cash flows for operating leases	$ 52,056
Operating cash flows for financing activities	570
Right-of-use assets obtained in exchange for new operating lease liabilities	274,212
Right-of-use assets obtained in exchange for new finance lease liabilities	$ 1,818

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Contracts with Customers - Summary of Accounts Receivable, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Revenue From Contract With Customer [Abstract]
Billed	$ 516,099	$ 538,808
Unbilled	200,477	135,180
Total accounts receivable, gross	716,576	673,988
Allowance for doubtful accounts	(42,902)	(50,702)
Total accounts receivable, net	$ 673,674	$ 623,286

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Fair Value of Financial Instruments - Additional Information (Details) - USD ($) $ in Billions	Sep. 30, 2019	Dec. 31, 2018
Fair Value Disclosures [Abstract]
Shares held by ESOP	78,138,602	78,172,809
Shares held by ESOP, redemption values	$ 2.6	$ 1.9

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Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Sep. 30, 2019	Sep. 28, 2018	Dec. 29, 2017	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Effective Corporation tax benefit rate percentage			69.69%
U.S. corporate tax rate	21.00%		21.00%		35.00%
Deferred tax benefit		$ 56,000	$ 105,161	$ (1,281)
Revised estimated effects of change in tax status based upon forecasted temporary differences	$ 85,000
Expected Income tax benefit	29,000
Discrete tax benefit	29,000
Deferred tax assets valuation allowance	18,100		18,100
Liability for income taxes associated with uncertain tax positions	$ 14,600		$ 14,600			$ 9,900

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Investments in and Advances to Joint Ventures - Summary of Financial Information for Consolidated Joint Ventures (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 28, 2018	Dec. 31, 2018
Schedule Of Equity Method Investments [Line Items]
Current assets	$ 1,474,261		$ 1,474,261		$ 1,488,807
Total assets	3,362,644		3,362,644		2,612,578
Current liabilities	1,156,259		1,156,259		1,006,161
Total liabilities	1,768,193		1,768,193		1,657,345
Total joint venture equity	(1,010,654)		(1,010,654)		(967,537)
Revenues	1,023,277	$ 976,157	2,917,424	$ 2,631,568
Costs	798,552	783,018	2,297,512	2,054,201
Net income attributable to Parsons Corporation	56,812	41,222	106,812	214,890
Net income attributable to noncontrolling interests	4,481	4,844	8,012	10,316
Consolidated Joint Ventures
Schedule Of Equity Method Investments [Line Items]
Current assets	254,204		254,204		287,227
Noncurrent assets	2,836		2,836		2,689
Total assets	257,040		257,040		289,916
Current liabilities	198,079		198,079		199,833
Total liabilities	198,079		198,079		199,833
Total joint venture equity	58,961		58,961		$ 90,083
Revenues	117,611	126,480	341,719	413,548
Costs	108,839	116,468	322,826	262,146
Net income attributable to Parsons Corporation	8,772	10,012	18,893	151,402
Net income attributable to noncontrolling interests	$ 4,481	$ 4,844	$ 8,012	$ 10,316

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Segment Information - Additional Information (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 28, 2018 USD ($)	Sep. 30, 2019 USD ($) segment	Sep. 28, 2018 USD ($)	Dec. 31, 2018 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments | segment			2
Revenues	$ 1,023,277	$ 976,157	$ 2,917,424	$ 2,631,568
Property and equipment, net	109,238		109,238		$ 91,849
Reversal of accrued liability	0		0	129,674
Critical Infrastructure
Segment Reporting Information [Line Items]
Revenues	537,102	532,432	1,529,940	1,555,443
Revenue Excluding Claim Settlement				1,500,000
Critical Infrastructure | Mobility Solutions
Segment Reporting Information [Line Items]
Revenues	286,199	300,523	836,779	894,796
Revenue Excluding Claim Settlement				839,700
Revenue
Segment Reporting Information [Line Items]
Reversal of accrued liability				55,100
Revenue | Critical Infrastructure | Mobility Solutions
Segment Reporting Information [Line Items]
Reversal of accrued liability		55,100		55,100
United States
Segment Reporting Information [Line Items]
Revenues	774,200	$ 747,700	2,200	$ 2,000
Property and equipment, net	$ 97,300		$ 97,300		$ 79,900

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Segment Information - Summary of Revenues and Property and Equipment, Net by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 28, 2018	Sep. 30, 2019	Sep. 28, 2018	Dec. 31, 2018
Segment Reporting Information [Line Items]
Revenues	$ 1,023,277	$ 976,157	$ 2,917,424	$ 2,631,568
Property and Equipment, Net	109,238		109,238		$ 91,849
North America
Segment Reporting Information [Line Items]
Revenues	849,839	805,320	2,400,124	2,131,562
Property and Equipment, Net	103,690		103,690		86,847
Middle East
Segment Reporting Information [Line Items]
Revenues	169,028	164,677	504,604	485,377
Property and Equipment, Net	5,548		5,548		$ 5,002
Rest of World
Segment Reporting Information [Line Items]
Revenues	$ 4,410	$ 6,160	$ 12,696	$ 14,629

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Fair Value of Financial Instruments - Summary of Assets Associated with Pension Plan (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value disclosure	$ 13,761	$ 13,068
Level 1
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value disclosure	3,182	2,900
Level 2
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value disclosure	10,579	10,168
Level 3
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value disclosure	0	0
Mutual Funds
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value disclosure	2,888	2,539
Mutual Funds | Level 1
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value disclosure	2,888	2,539
Mutual Funds | Level 2
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value disclosure	0	0
Mutual Funds | Level 3
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value disclosure	0	0
Fixed Income
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value disclosure	10,579	10,168
Fixed Income | Level 1
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value disclosure	0	0
Fixed Income | Level 2
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value disclosure	10,579	10,168
Fixed Income | Level 3
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value disclosure	0	0
Cash and Cash Equivalents
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value disclosure	294	361
Cash and Cash Equivalents | Level 1
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value disclosure	294	361
Cash and Cash Equivalents | Level 2
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value disclosure	0	0
Cash and Cash Equivalents | Level 3
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value disclosure	$ 0	$ 0