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.

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 ~~June 6, 2019,~~July 28, 2021, the registrant had ~~99,434,877~~102,502,780 shares of common stock, $1.00 par value per share, outstanding.

		December 31, 2018			March 31, 2019				June 30, 2021			December 31, 2020
Assets	Assets							Assets
Current assets:	Current assets:							Current assets:
	Cash and cash equivalents (including $73,794 and $42,872 Cash of consolidated joint ventures)	$	280,221		$	121,408		Cash and cash equivalents (including $57,563 and $75,220 Cash of consolidated joint ventures)	$	483,443		$	483,609
	Restricted cash and investments		974			9,061		Restricted cash and investments		1,145			3,606
	Accounts receivable, net (including $180,325 and $193,597 Accounts receivable of consolidated joint ventures, net)		623,286			651,924		Accounts receivable, net (including $173,640 and $190,643 Accounts receivable of consolidated joint ventures, net)		637,980			698,578
	Contract assets (including $21,270 and $23,964 Contract assets of consolidated joint ventures)		515,319			571,755		Contract assets (including $25,192 and $23,498 Contract assets of consolidated joint ventures)		568,239			576,568
	Prepaid expenses and other current assets (including $11,837 and $9,423 Prepaid expenses and other current assets of consolidated joint ventures)		69,007			77,013		Prepaid expenses and other current assets (including $6,657 and $3,045 Prepaid expenses and other current assets of consolidated joint ventures)		103,599			80,769
	Total current assets		1,488,807			1,431,161		Total current assets		1,794,406			1,843,130

	Property and equipment, net (including $2,561 and $2,507 Property and equipment of consolidated joint ventures, net)		91,849			97,298		Property and equipment, net (including $2,283 and $2,629 Property and equipment of consolidated joint ventures, net)		110,617			121,027
	Right of use assets, operating leases		-			216,484		Right of use assets, operating leases		194,484			210,398
	Goodwill		736,938			921,097		Goodwill		1,263,060			1,261,978
	Investments in and advances to unconsolidated joint ventures		63,560			67,202		Investments in and advances to unconsolidated joint ventures		86,045			68,975
	Intangible assets, net		179,519			250,948		Intangible assets, net		197,985			245,958
	Deferred tax assets		5,680			4,891		Deferred tax assets		147,146			130,200
	Other noncurrent assets		46,225			43,917		Other noncurrent assets		45,554			56,038
	Total assets	$	2,612,578		$	3,032,998		Total assets	$	3,839,297		$	3,937,704

Liabilities and Shareholder’s Equity
Liabilities and Shareholders' Equity								Liabilities and Shareholders' Equity
Current liabilities:	Current liabilities:							Current liabilities:
	Accounts payable (including $87,914 and $91,505 Accounts payable of consolidated joint ventures)	$	226,345		$	203,684		Accounts payable (including $85,425 and $97,810 Accounts payable of consolidated joint ventures)	$	191,688		$	225,679
	Accrued expenses and other current liabilities (including $73,209 and $71,593 Accrued expenses and other current liabilities of consolidated joint ventures)		559,700			547,954		Accrued expenses and other current liabilities (including $70,015 and $68,801 Accrued expenses and other current liabilities of consolidated joint ventures)		582,610			650,753
	Contract liabilities (including $38,706 and $46,754 Contract liabilities of consolidated joint ventures)		208,576			225,017		Contract liabilities (including $35,260 and $33,922 Contract liabilities of consolidated joint ventures)		196,547			201,864
	Short-term lease liabilities, operating leases		-			53,029		Short-term lease liabilities, operating leases		53,997			54,133
	Income taxes payable		11,540			9,415		Income taxes payable		2,582			4,980
	Short-term notes payable		-			149,786		Short-term debt		50,000			50,000
	Total current liabilities		1,006,161			1,188,885		Total current liabilities		1,077,424			1,187,409
	Long-term employee incentives		41,913			29,991		Long-term employee incentives		23,222			21,828
	Deferred gain resulting from sale-leaseback transactions		46,004			-		Long-term debt		590,876			539,998
	Long-term debt		429,164			509,211		Long-term lease liabilities, operating leases		164,754			182,467
	Long-term lease liabilities, operating leases		-			181,274		Deferred tax liabilities		12,690			12,285
	Deferred tax liabilities		6,240			7,922		Other long-term liabilities		119,881			132,300
	Other long-term liabilities		127,863			111,023		Total liabilities		1,988,847			2,076,287
	Total liabilities		1,657,345			2,028,306
Commitments and contingencies (Note 14)
	Redeemable common stock held by Employee Stock Ownership Plan (ESOP) ,$1 par value; authorized 150,000,000 shares; 125,097,684 shares issued; 78,172,809 and 78,138,831 shares outstanding, recorded at redemption value		1,876,309			1,875,332

Shareholder's equity (deficit):
Contingencies (Note 12)								Contingencies (Note 12)
Shareholders' equity:								Shareholders' equity:
	Treasury Stock, 46,918,140 and 46,958,853 shares at cost		(957,025	)		(957,838	)	Common stock, $1 par value; authorized 1,000,000,000 shares; 146,751,406 and 146,609,288 shares issued; 30,213,867 and 25,719,350 public shares outstanding; 72,288,913 and 76,641,312 ESOP shares outstanding		146,752			146,609
	Retained earnings		12,445			75,771		Treasury stock, 44,248,626 shares at cost		(899,328	)		(899,328	)
	Accumulated other comprehensive loss		(22,957	)		(20,401	)	Additional paid-in capital		2,673,965			2,700,925
	Total Parsons Corporation shareholder's equity (deficit)		(967,537	)		(902,468	)	Accumulated deficit		(102,019	)		(120,569	)
	Noncontrolling interests		46,461			31,828		Accumulated other comprehensive loss		(5,905	)		(13,865	)
	Total shareholder's equity (deficit)		(921,076	)		(870,640	)	Total Parsons Corporation shareholders' equity		1,813,465			1,813,772
	Total liabilities, redeemable common stock and shareholder's equity (deficit)	$	2,612,578		$	3,032,998		Noncontrolling interests		36,985			47,645
								Total shareholders' equity		1,850,450			1,861,417
								Total liabilities and shareholders' equity	$	3,839,297		$	3,937,704

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

For the Three Months Ended

March 30, 2018

March 31, 2019

Revenues

$
754,679

$
904,405

Direct costs of contracts

602,972

714,237

Equity in earnings of unconsolidated joint ventures

11,031

10,397

Indirect, general and administrative expenses

123,847

177,519

Operating income

38,891

23,046

Interest income

741

477

Interest expense

(3,999
)

(8,292
)
Other income, net

1,152

41

(Interest and other expense) gain associated with claim on long-term contract

(2,330
)

-

Total other expense

(4,436
)

(7,774
)
Income before income tax provision

34,455

15,272

Income tax provision

(5,353
)

(1,886
)
Net income including noncontrolling interests

29,102

13,386

Net income attributable to noncontrolling interests

(3,815
)

(3,645
)
Net income attributable to Parsons Corporation

$
25,287

$
9,741

Earnings per share:

Basic and diluted

$
0.31

$
0.12

	For the Three Months Ended						For the Six Months Ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Revenue	$	879,356		$	979,459		$	1,754,053		$	1,950,452
Direct cost of contracts		680,328			749,324			1,349,410			1,518,956
Equity in earnings of unconsolidated joint ventures		9,428			3,769			16,958			9,883
Selling, general and administrative expenses		188,238			187,640			375,760			371,414
Operating income		20,218			46,264			45,841			69,965
Interest income		152			196			250			424
Interest expense		(4,910	)		(4,159	)		(9,451	)		(8,181	)
Other income (expense), net		405			715			(1,386	)		263
Total other income (expense)		(4,353	)		(3,248	)		(10,587	)		(7,494	)
Income before income tax expense		15,865			43,016			35,254			62,471
Income tax expense		(3,838	)		(11,891	)		(9,213	)		(16,975	)
Net income including noncontrolling interests		12,027			31,125			26,041			45,496
Net income attributable to noncontrolling interests		(5,325	)		(7,826	)		(10,300	)		(9,224	)
Net income attributable to Parsons Corporation	$	6,702		$	23,299		$	15,741		$	36,272
Earnings per share:
Basic	$	0.07		$	0.23		$	0.15		$	0.36
Diluted	$	0.06		$	0.23		$	0.15		$	0.36

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

		For the Six Months Ended
		June 30, 2021			June 30, 2020
Cash flows from operating activities:
	Net income including noncontrolling interests	$	26,041		$	45,496
	Adjustments to reconcile net income to net cash provided by (used in) operating activities
	Depreciation and amortization		69,308			64,490
	Amortization of debt issue costs		1,530			369
	Loss (gain) on disposal of property and equipment		297			(43	)
	Provision for doubtful accounts		0			38
	Deferred taxes		(4,217	)		325
	Foreign currency transaction gains and losses		2,395			1,185
	Equity in earnings of unconsolidated joint ventures		(16,958	)		(9,883	)
	Return on investments in unconsolidated joint ventures		18,132			15,893
	Stock-based compensation		11,361			6,432
	Contributions of treasury stock		26,518			29,468
	Changes in assets and liabilities, net of acquisitions and newly consolidated joint ventures:
	Accounts receivable		58,146			(49,618	)
	Contract assets		8,360			(70,739	)
	Prepaid expenses and other assets		(11,153	)		(999	)
	Accounts payable		(34,372	)		(6,228	)
	Accrued expenses and other current liabilities		(97,541	)		(21,983	)
	Contract liabilities		(5,957	)		(11,047	)
	Income taxes		(2,402	)		4,048
	Other long-term liabilities		(11,025	)		(28,648	)
	Net cash provided by (used in) operating activities		38,463			(31,444	)
Cash flows from investing activities:
	Capital expenditures		(9,171	)		(22,938	)
	Proceeds from sale of property and equipment		384			943
	Payments for acquisitions, net of cash acquired		256			0
	Investments in unconsolidated joint ventures		(26,373	)		(3,844	)
	Return of investments in unconsolidated joint ventures		727			17
	Proceeds from sales of investments in unconsolidated joint ventures		14,335			0
	Net cash used in investing activities		(19,842	)		(25,822	)
Cash flows from financing activities:
	Proceeds from borrowings under credit agreement		0			180,600
	Repayments of borrowings under credit agreement		0			(180,600	)
	Payments for debt costs and credit agreement		(1,826	)		0
	Contributions by noncontrolling interests		872			223
	Distributions to noncontrolling interests		(21,836	)		(1,605	)
	Taxes paid on vested stock		(2,242	)		(1,149	)
	Proceeds from issuance of common stock		2,773			1,684
	Net cash used in financing activities		(22,259	)		(847	)
	Effect of exchange rate changes		1,011			(641	)
	Net decrease in cash, cash equivalents, and restricted cash		(2,627	)		(58,754	)
	Cash, cash equivalents and restricted cash:
	Beginning of year		487,215			195,374
	End of period	$	484,588		$	136,620

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

For the Three Months Ended

March 30, 2018

March 31, 2019

Cash flows from operating activities:

Net income including noncontrolling interests

$
29,102

$
13,386

Adjustments to reconcile net income to net cash used in operating activities

Depreciation and amortization

9,009

30,591

Amortization of deferred gain

(1,813
)

-

Amortization of debt issue costs

149

244

(Gain) loss on disposal of property and equipment

18

(27
)

Provision for doubtful accounts

2,426

(279
)

Deferred taxes

(138
)

1,486

Foreign currency transaction gains and losses

(457
)

618

Equity in earnings of unconsolidated joint ventures

(11,031
)

(10,397
)

Return on investments in unconsolidated joint ventures

15,406

10,794

Contributions of treasury stock

11,357

12,250

Changes in assets and liabilities, net of acquisitions and newly consolidated
joint ventures:

Accounts receivable

469,720

(17,135
)

Contract assets

(531,157
)

(46,984
)

Prepaid expenses and current assets

(27,138
)

(1,424
)

Accounts payable

(723
)

(28,182
)

Accrued expenses and other current liabilities

(44,016
)

(24,023
)

Billings in excess of costs

(152,147
)

-

Contract liabilities

299,639

14,884

Provision for contract losses

(143,666
)

-

Income taxes

(597
)

(3,645
)

Other long-term liabilities

10,624

(12,265
)

Net cash used in operating activities

(65,433
)

(60,108
)
Cash flows from investing activities:

Capital expenditures

(5,152
)

(11,041
)

Proceeds from sale of property and equipment

29

135

Payments for acquisitions, net of cash acquired

-

(287,482
)

Investments in unconsolidated joint ventures

(3,058
)

(4,905
)

Return of investments in unconsolidated joint ventures

-

2,234

Net cash used in investing activities

(8,181
)

(301,059
)
Cash flows from financing activities:

Proceeds from borrowings under credit agreement

-

290,000

Repayments of borrowings under credit agreement

-

(60,000
)

Payments for debt costs and credit agreement

-

(286
)

Contributions by (distributions to) noncontrolling interests, net

6,497

(18,278
)

Purchase of treasury stock

(366
)

(813
)

Net cash provided by financing activities

6,131

210,623

Effect of exchange rate changes

(825
)

(182
)

Net increase (decrease) in cash, cash equivalents, and restricted cash

(68,308
)

(150,726
)

Cash, cash equivalents and restricted cash

Beginning of year

446,144

281,195

End of period

$
377,836

$
130,469

								Retained			Accumulated
						Additional		Earnings			Other			Total
	Common		Treasury			Paid-in		(Accumulated			Comprehensive			Parsons		Noncontrolling
	Stock		Stock			Capital		Deficit)			Income (Loss)			Equity		Interests			Total
Balance at March 31, 2021	$	146,654	$	(899,328	)	$	2,667,130	$	(108,720	)	$	(8,937	)	$	1,796,799	$	43,643		$	1,840,442
Comprehensive income
Net income		-		-			-		6,702			-			6,702		5,325			12,027
Foreign currency translation gain, net		-		-			-		-			3,013			3,013		(1	)		3,012
Pension adjustments, net		-		-			-		-			19			19		-			19
Contributions		-		-			-		-			-			-		865			865
Distributions		-		-			-		-			-			-		(12,847	)		(12,847	)
Issuance of equity securities, net of retirements		98		-			2,680		(1	)		-			2,777		-			2,777
Stock-based compensation		-		-			4,155		-			-			4,155		-			4,155
Balance at June 30, 2021	$	146,752	$	(899,328	)	$	2,673,965	$	(102,019	)	$	(5,905	)	$	1,813,465	$	36,985		$	1,850,450


Balance at March 31, 2020	$	146,441	$	(934,240	)	$	2,652,227	$	(206,052	)	$	(23,114	)	$	1,635,262	$	32,117		$	1,667,379
Comprehensive income
Net income		-		-			-		23,299			-			23,299		7,826			31,125
Foreign currency translation gain, net		-		-			-		-			3,100			3,100		4			3,104
Pension adjustments, net		-		-			-		-			23			23		-			23
Contributions		-		-			-		-			-			-		2			2
Distributions		-		-			-		-			-			-		(1,245	)		(1,245	)
Issuance of equity securities, net of retirements		55		-			1,629		-			-			1,684		-			1,684
Stock-based compensation		-		-			4,180		-			-			4,180		-			4,180
Balance at June 30, 2020	$	146,496	$	(934,240	)	$	2,658,036	$	(182,753	)	$	(19,991	)	$	1,667,548	$	38,704		$	1,706,252

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

Accumulated

Redeemable

Other

Total

Common

Treasury

Retained

Comprehensive

Parsons

Noncontrolling

Stock

Stock

Earnings

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

9,741

9,741

3,645

13,386

Foreign currency translation gain

2,547

2,547

2,547

Pension adjustments

9

9

9

ASC 842 transition adjustment

52,608

52,608

52,608

Purchase of treasury stock

(813
)

(813
)

813

-

-

Distributions, net of contributions

-

(18,278
)

(18,278
)
ESOP shares at redemption value

(164
)

164

164

164

Balance at March 31, 2019

$
1,875,332

$
(957,838
)

$
75,771

$
(20,401
)

$
(902,468
)

$
31,828

$
(870,640
)

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

25,287

25,287

3,815

29,102

Foreign currency translation gain (loss)

(2,781
)

(2,781
)

(3
)

(2,784
)
Pension adjustments

(19
)

(19
)

(19
)
Adoption of ASC 606

(4,735
)

(4,735
)

103

(4,632
)
Purchase of treasury stock

(367
)

(367
)

367

-

-

Contributions, net of distributions

-

6,497

6,497

Balance at March 30, 2018

$
1,854,938

$
(876,738
)

$
(165,116
)

$
(17,803
)

$
(1,059,658
)

$
37,906

$
(1,021,752
)

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

									Retained			Accumulated
						Additional			Earnings			Other			Total
	Common		Treasury			Paid-in			(Accumulated			Comprehensive			Parsons			Noncontrolling
	Stock		Stock			Capital			Deficit)			Income (Loss)			Equity			Interests			Total
Balance at December 31, 2020	$	146,609	$	(899,328	)	$	2,700,925		$	(120,569	)	$	(13,865	)	$	1,813,772		$	47,645		$	1,861,417
Comprehensive income
Net income		-		-			-			15,741			-			15,741			10,300			26,041
Foreign currency translation (loss), net		-		-			-			-			7,922			7,922			4			7,926
Pension adjustments, net		-		-			-			-			38			38			-			38
Adoption of ASU 2020-06		-		-			(40,002	)		2,782			-			(37,220	)		-			(37,220	)
Contributions		-		-			-			-			-			-			872			872
Distributions		-		-			-			-			-			-			(21,836	)		(21,836	)
Issuance of equity securities, net of retirement		143		-			1,681			27			-			1,851			-			1,851
Stock-based compensation		-		-			11,361			-			-			11,361			-			11,361
Balance at June 30, 2021	$	146,752	$	(899,328	)	$	2,673,965		$	(102,019	)	$	(5,905	)	$	1,813,465		$	36,985		$	1,850,450


Balance at December 31, 2019	$	146,441	$	(934,240	)	$	2,649,975		$	(218,025	)	$	(14,261	)	$	1,629,890		$	30,866		$	1,660,756
Comprehensive income
Net income		-		-			-			36,272			-			36,272			9,224			45,496
Foreign currency translation gain, net		-		-			-			-			(5,692	)		(5,692	)		(4	)		(5,696	)
Pension adjustments, net		-		-			-			-			(38	)		(38	)		-			(38	)
Adoption of ASU 2016-13		-		-			-			(1,000	)		-			(1,000	)		-			(1,000	)
Contributions		-		-			-			-			-			-			223			223
Distributions		-		-			-			-			-			-			(1,605	)		(1,605	)
Issuance of equity securities, net of retirement		55		-			1,629			-			-			1,684			-			1,684
Stock-based compensation		-		-			6,432			-			-			6,432			-			6,432
Balance at June 30, 2020	$	146,496	$	(934,240	)	$	2,658,036		$	(182,753	)	$	(19,991	)	$	1,667,548		$	38,704		$	1,706,252

Parsons Corporation, a Delaware corporation, and its subsidiaries (collectively, the “Company”) is a leading provider of technology-driven solutions in the defense, intelligence and critical infrastructure markets. We provide ~~sophisticated design, engineering~~software and hardware products, technical services and ~~smart~~integrated solutions to support our customers’ missions. We have developed significant expertise and ~~agile software~~differentiated capabilities in key areas of cybersecurity, intelligence, missile defense, C5ISR, space, geospatial, and connected communities. By combining our talented team of professionals and advanced technology, we help solve complex technical challenges to ~~the United States federal government~~enable a safer, smarter 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. Parsons Employee Stock Ownership Plan (“ESOP”) is the sole shareholder of the Company.

Effective 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 effective May 14, 2019 to purchase an additional 2,777,775 shares at the share price of $25.515 which is the initial public offering share price of $27.00 less the underwriting discount of $1.485 per share. The net proceeds of the initial public offering and the underwriters’ share option was approximately $533.8 million, after deducting underwriting discounts and other fees, 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.

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 initial public offering 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. The Company’s consolidated financial statements include the effects of this Stock Dividend.more interconnected world.

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 Annual Report on Form ~~S-1/A filed on April 29, 2019.~~10-K for the year ended December 31, 2020.

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~~Parsons Corporation and its subsidiaries and affiliates which it controls. Interests in joint ventures ofthat are controlled by the Company, or for which ~~we are~~the Company is otherwise deemed to be the primary ~~beneficiary. The equity method of accounting is applied for the~~beneficiary, are consolidated. For joint ventures in which the Company does not have a controlling interest, but exerts a significant influence, the Company applies the equity method of accounting (see “Note 1614 –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 Intercompany accounts and ~~continue to be reported~~transactions are eliminated in ~~accordance~~

~~with previous guidance. See “Note 6 – Leases” for further discussion of the adoption and the impact on the Company’s financial statements.~~

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 quarters of fiscal 2018 and fiscal 2019 are March 30, 2018 and March 31, 2019, respectively. The number of days in the quarters ended March 30, 2018 and March 31, 2019 were 91 and 90, respectively.consolidation.

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;~~ 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 ~~refer to~~see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” and “Note ~~2 –~~ 2—Summary of Significant Accounting ~~Policies” of Notes~~Polices” in the notes to ~~Consolidated Financial Statements~~our consolidated financial statements included in the Company’s Form ~~S-1/A filed April 29, 2019,~~10-K for the year ended December 31, 2020, 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.

During the second quarter of fiscal 2020, initial purchases of the Company’s common Stock were made under the Parsons Employee Stock Purchase Program (“ESPP”). Under the ESPP, eligible employees who elect to participate are granted the right to purchase shares of the common stock of Parsons at a discount that is limited to 5% of the per-share market value on the day shares are sold to employees. Purchases of common stock under the ESPP are included in

“proceeds from issuance of common stock” in cash flows from financing activities in the Consolidated Statements of Cash Flows.

In the first quarter of ~~2019,~~2021, the Company early adopted Accounting Standards Update (“ASU”) ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06)”. The update simplifies the accounting for convertible debt instruments and convertible preferred stock by reducing the number of accounting models and limiting the number of embedded conversion features separately recognized from the primary contract. The guidance also includes targeted improvements to the disclosures for convertible instruments and earnings per share. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. The Company adopted ASU 2020-06 in the first quarter of 2021 using the modified retrospective method which resulted in a reduction in non-cash interest expense and reclassification of the equity portion of the Convertible Senior Notes to “Long-term debt” on the consolidated balance sheet.

In the first quarter of 2021, the Company adopted ~~Topic 842. See “Note 6 – Leases”~~ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for ~~further discussion~~Income Taxes (“ASU 2019-12”)”. ASU 2019-12 was issued as a means to reduce the complexity of accounting for income taxes. The guidance is to be applied using a prospective method, excluding amendments related to franchise taxes, which should be applied on either a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The adoption ~~and the~~of ASU 2019-12 did not have a material impact on the ~~Company’s~~consolidated financial statements.

In the first quarter of ~~2019,~~2020, the Company adopted ASU ~~2018-02, “Reclassification~~2016-13, “Measurement of ~~Certain Tax Effects from Accumulated Other Comprehensive Income” under which~~Credit Losses on Financial Instruments.” The amendments in ASU 2016-13 replaced the ~~Company did not elect~~incurred loss impairment methodology in current practice with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information 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 theestimate credit losses. 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 adoption2016-13 did not have a material impact on the consolidated financial statements.

On ~~May 31, 2018,~~November 19, 2020, the Company acquired a 100% ownership interest in ~~Polaris Alpha,~~Braxton Science & Technology Group (“Braxton”), a ~~privately owned, advanced technology-focused provider of innovative mission solutions~~privately-owned company, for ~~complex defense, intelligence, and security customers, as well as other U.S. federal government customers, for $489.1~~$309.5 million ~~paid~~ in cash. Braxton operates at the forefront of satellite operations, ground system automation, flight dynamics, and spacecraft and antenna simulation for the U.S. Department of Defense and Intelligence Community. The ~~Company borrowed $260 million under the credit agreement,~~acquisition was entirely funded by cash on hand in August 2020, as described in “Note ~~12 –~~ 12—Debt and Credit ~~Facilities,” to partially fund the acquisition.~~Facilities”. In

connection with this acquisition, the Company recognized ~~$6.2~~$0.6 million of ~~acquisition-related expenses in “Indirect,~~acquisition related “Selling, general and administrative expense” in the consolidated statements of income for the ~~fiscal year~~six months ended ~~December 31, 2018,~~June 30, 2021, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. ~~Polaris Alpha enhances~~Braxton allows Parsons to capitalize on the ~~Company’s artificial intelligence~~quickly evolving space missions of its national security space customers and ~~data analytics expertise with new technologies~~address rapid market growth driven by proliferated low earth orbit constellations, small satellite expansion, 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.space cyber resiliency.

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

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

Amortization expense of ~~$13.7~~$4.0 million and $8.1 million related to these intangible assets was recorded for the three and six months ended ~~March 31, 2019.~~ June 30, 2021, respectively.The entire value of goodwill ~~of $243.5 million~~ was assigned to the ~~Parsons~~ Federal Solutions reporting unit and represents synergies expected to be realized from this business combination. ~~A portion~~Goodwill of ~~goodwill~~$196.3 million is deductible for tax purposes. ~~The Company is in the process of finalizing the amount.~~

The amount of revenue generated by ~~Polaris Alpha~~Braxton and included within consolidated revenues is $29.3 million and $60.3 million for the three and six months ended ~~March 31, 2019 is $93.4 million.~~ June 30, 2021, 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 information ~~on an~~of unaudited pro forma operating results assuming the ~~Polaris Alpha~~Braxton acquisition had been consummated as of the beginning of fiscal year ~~2018 (December 31, 2017)~~2019 (in thousands) is as follows:

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.

On January 7, 2019, the Company acquired a 100% ownership interest in OGSystems, 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 $292.4 million paid in cash. The Company borrowed $110 million under the credit agreement and $150 million on a short-term loan, as described in “Note 12 – Debt and Credit Facilities,” to partially fund the acquisition. In connection with this acquisition, the Company recognized $4.1 million of acquisition-related expenses in “Indirect, general and administrative expense” in the consolidated statements of income for the period ended March 31, 2019, 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 preliminary purchase price allocation as of the date of acquisition (in thousands):~~

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

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

Amortization expense of $5.9 million related to these intangible assets was recorded for the three months ended March 31, 2019. The entire value of goodwill of $183.6 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 months ended March 31, 2019 is $29.0 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 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:

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):

~~Refer to~~See “Note 2018 – Segments Information” for the Company’s revenues by business lines.

Contract assets and contract liabilities balances at June 30, 2021 and December 31, ~~2018 and March 31, 2019~~2020 were as follows (in thousands):

During the three months ended ~~March~~June 30, ~~2018~~2021 and ~~March 31, 2019,~~June 30, 2020, the Company recognized revenue of ~~approximately $26.3~~$23.5 million and ~~$85.7~~$28.4 million, respectively, and $92.6 million and $122.7 million during the six months ended June 30, 2021 and June 30, 2020, respectively,that was included in the corresponding contract liability ~~balance~~balances at December ~~30, 2017~~31, 2020 and December 31, ~~2018,~~2019, respectively. ~~The change~~Certain changes in contract assets and contract liabilities ~~was~~consisted of the ~~result of normal business activity and not significantly impacted by other factors, except as follows:~~following:

There was no0 significant impairment of contract assets recognized during the three and six months ended ~~March~~June 30, ~~2018~~2021 and ~~March~~June 30, 2020.

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 the following changes in revenue:

Accounts receivable, net consisted of the following as of June 30, 2021 and December 31, ~~2019.~~2020 (in thousands):

Billed accounts receivable represents amounts billed to clients that have not been collected. Unbilled accounts receivable represents amounts where the Company ~~recognized revenues~~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 ~~$18.7 million~~trends in actual and ~~$4.5 million, respectively,~~forecasted credit quality of ~~unapproved change orders~~clients, including delinquency and ~~claims~~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. We have not seen and do not expect there to be a risk of non-payment from ~~changes in transaction price associated with performance obligations that were satisfied~~either our government agency or ~~partially satisfied. These amounts represent management’s estimates~~commercial customers related to COVID-19 impacts; however, we have experienced payment delays due to administrative limitations from both types of additional contract revenues that had been earned and were probable of collection. The amount ultimately realized by the Company cannot currently be determined but could be significantly higher or lower than the estimated amount.customers.

Transaction Price Allocated to the Remaining Unsatisfied Performance Obligations

The Company’s remaining unsatisfied performance obligations (“RUPO”) as of ~~March 31, 2019~~June 30, 2021 represent a measure of the total dollar value of work to be performed on contracts awarded and ~~in progress.~~in-progress. The Company had ~~$5.3~~$5.1 billion in RUPO as of ~~March 31, 2019.~~June 30, 2021.

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 for the Federal Solutions segment.~~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 ~~March 31, 2019~~June 30, 2021 over the following periods (in thousands):

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 119 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~~after the ~~seventh~~third year. ~~As of March 31, 2019, assets recorded under finance leases were $1.3 million and accumulated depreciation associated with finance leases was $0.2 million.~~

The components of lease costs for the three and six months ended ~~March 31, 2019~~June 30, 2021 and June 30, 2020 are as follows (in thousands):

Supplemental cash flow information related to leases for the ~~three~~six months ended ~~March 31, 2019~~June 30, 2021 and June 30, 2020 is as follows (in thousands):

Supplemental balance sheet and other information related to leases as of ~~March~~June 30, 2021 and December 31, ~~2019 is~~2020 are as follows (in thousands):

As of ~~March 31, 2019,~~June 30, 2021, the Company has ~~additional~~0 operating leases ~~primarily for office spaces,~~ that have not yet ~~commenced of $6.2 million. These operating leases will commence in 2019 with lease terms of 4 years to 6 years.~~commenced.

A maturity analysis of the future undiscounted cash flows associated with the Company’s operating and finance lease liabilities as of ~~March 31, 2019~~June 30, 2021 is as follows (in thousands):

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 months ended March 30, 2018 was $18.2 million.

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

Billed accounts receivable represent amounts billed to clients that have not been collected. Unbilled accounts receivable represent revenue recognized but not yet billed pursuant to contract terms or billed after the period-end date. Substantially all unbilled receivables as of March 31, 2019 are expected to be billed and collected within 12 months. Unbilled accounts receivable at December 31, 2018 and March 31, 2019 include approximately $47.1 million and $49.4 million, respectively, related to unapproved change orders, claims, and requests for equitable adjustment. The Company regularly evaluates these amounts and records adjustments to operating income when recoverability is deemed to have changed. For the periods ended December 31, 2018 and March 31, 2019, no material losses were recognized related to the collectability of claims, unapproved change orders, and requests for equitable adjustment.

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.

The following table summarizes the changes in the carrying value of goodwill by reporting segment atfrom December 31, ~~2018 and March 31, 2019~~2020 to June 30, 2021 (in thousands):

The ultimate impact from the COVID-19 pandemic is difficult to predict. While many uncertainties exist, we currently anticipate no material change in our financial condition or results of operations. Although the Company does not anticipate a material change to our financial condition or results of operations, the Company performed a qualitative triggering analysis and determined there was no triggering event indicating a potential impairment to the carrying value of its goodwill at June 30, 2021 and concluded there has 0t been an impairment.

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

	December 31, 2018							March 31, 2019							Weighted Average		June 30, 2021							December 31, 2020							Weighted Average
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Amortization Period (in years)		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	$	108,454	$	(65,636	)	$	42,818		3	$	147,455	$	(112,066	)	$	35,389	$	145,855	$	(101,038	)	$	44,817		3
Customer relationships		121,629		(38,974	)		82,655		178,729		(45,839	)		132,890		7		262,830		(133,908	)		128,922		264,129		(110,450	)		153,679		8
Leases		670		(561	)		109		670		(566	)		104		5		670		(609	)		61		670		(599	)		71		5
Developed technology		87,839		(15,174	)		72,665		89,139		(20,736	)		68,403		4		112,939		(82,793	)		30,146		112,039		(68,968	)		43,071		4
Trade name		3,600		(2,100	)		1,500		7,400		(2,992	)		4,408		1		8,200		(8,167	)		33		8,200		(7,967	)		233		1
Non compete agreements		-		-			-		2,400		(200	)		2,200		2
Non-compete agreements																		4,250		(2,688	)		1,562		4,250		(2,043	)		2,207		3
In process research and development																		1,800		-			1,800		1,800		0			1,800	n/a
Other intangibles		275		(145	)		130		275		(150	)		125		10		275		(203	)		72		275		(195	)		80		10
Total intangible assets	$	294,767	$	(115,249	)	$	179,518	$	387,067	$	(136,119	)	$	250,948			$	538,419	$	(340,434	)	$	197,985	$	537,218	$	(291,260	)	$	245,958

The aggregate amortization expense of intangible assets ~~was $1.8 million and $20.9 million~~ for the three months ended ~~March~~June 30, ~~2018~~2021 and ~~March 31, 2019,~~June 30, 2020 was $24.5 million and $22.1 million, respectively, and $49.0 million and $44.8 million for the six months ended June 30, 2021 and June 30, 2020, respectively.

Estimated amortization expense for the remainder of the current fiscal year and in each of the next ~~five~~four years and beyond is as follows (in thousands):

Property and equipment consisted of the following at June 30, 2021 and December 31, ~~2018 and March 31, 2019~~2020 (in thousands):

Depreciation expense ~~of $7.2 million and $9.7 million was recorded~~ for the three months ended ~~March~~June 30, ~~2018~~2021 and ~~March 31, 2019, respectively.~~June 30, 2020 was $9.5 million and $9.8 million, respectively, and $19.2 million and $19.4 million, respectively, for the six months ended June 30, 2021 and June 30, 2020.

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 approximately $106.7 million and a total deferred gain of approximately $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 million and $0 for the three months ended March 30, 2018 and March 31, 2019, respectively. 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. Refer to “Note 6 – Leases”.

In ~~November 2017,~~June 2021, the Company entered into ~~an amended and restated Credit Agreement.~~a $650 million unsecured revolving credit facility (the “Credit Agreement”). The Company incurred ~~approximately~~ $2.0 million of costs in connection with this ~~amendment.~~Credit Agreement. The 2021 Credit Agreement replaced an existing Fifth Amended and Restated Credit Agreement dated as of November 15, 2017. Under the new agreement, the Company’s revolving credit facility was increased from ~~$500~~$550 million to ~~$550 million~~$650 million. The credit facility has a five-year maturity, which may be extended up to 2 times for periods determined by the Company and the ~~term of~~applicable extending lenders, and permits the ~~agreement was extended through November 2022.~~ Company to borrow in U.S. dollars, certain specified foreign currencies, and each

other currency that may be approved in accordance with the 2021 Facility.The borrowings under the Credit Agreement bear interest ~~at the Company’s option,~~ at either ~~the Base Rate~~a eurocurrency rate plus a margin between 1.0% and 1.625% or a base rate (as defined in the Credit Agreement), plus ~~an applicable~~a margin ~~or LIBOR plus an applicable margin. The applicable margin for Base Rate loans is a range~~ of ~~0.125% to 1.00%~~between 0% 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.~~ 0.625%.The rates aton June 30, 2021 and December 31, ~~2018~~2020 were 1.34% and ~~March 31, 2019 were 4.253% and 4.267%~~1.87%, respectively. Borrowings under this Credit Agreement are guaranteed by certain ~~of the Company’s~~Company operating subsidiaries. Letters of credit commitments outstanding under this agreement aggregated ~~approximately $49.8~~to $45.0 million and ~~$48.8~~$44.9 million at June 30, 2021 and December 31, ~~2018 and March 31, 2019,~~2020, respectively, which reduced borrowing limits available to the Company. Interest expense related to the ~~credit agreement~~Credit Agreement was ~~$3.4~~$0.3 million and$0.3 millionfor the three months ended ~~March 31, 2019.~~June 30, 2021 and June 30, 2020, respectively, and was $0.5 million and $0.7 million for six months ended June 30, 2021 and June 30, 2020, respectively. There were no0 loan amounts outstanding ~~during~~under the ~~three months ended March~~Credit Agreement on June 30, ~~2018.~~2021.

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):

The Company incurred ~~approximately~~ $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 ~~approximately~~ $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 ~~approximated~~for both the three and six months ended June 30, 2021 and June 30, 2020 was $3.1 million and ~~$3.1~~$6.2 million, ~~for the periods ended March 30, 2018 and March 31, 2019,~~ respectively. The amortization of debt issuance costs and interest expense ~~are~~is recorded in “Interest expense” on the consolidated statements of income. The Company made interest payments ~~related to the Senior Notes~~ of ~~approximately~~ $6.2 million for both the three and ~~$6.2 million during the periods~~six months ended ~~March~~June 30, ~~2018~~2021 and ~~March 31, 2019.~~ June 30, 2020, respectively.Interest payable of ~~approximately $5.7~~$5.5 million ~~and $2.6 million~~ is recorded in “Accrued expenses and other current liabilities” on the consolidated balance sheets aton both June 30, 2021 and December 31, ~~2018 and March 31, 2019,~~2020, respectively, related to the Senior Notes. The Company paid the $50 million Series A tranche of the Senior Note as scheduled in July 2021.

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 June 30, 2021 and December 31, ~~2018 and March 31, 2019.~~2020.

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 ~~approximately $223.0~~$219.2 million and ~~$227.7~~$193.1 million at June 30, 2021 and December 31, ~~2018 and March 31, 2019,~~2020, respectively.

Using a discounted cash flow technique that incorporates a market interest yield curve with adjustments for duration, optionality, and risk profile, the Company ~~has determined that~~estimated the fair value ~~(level~~(Level 2) of its ~~debt~~Senior Notes at June 30, 2021 approximates ~~the carrying value. Refer to~~$273.9 million. See “Note 1816 – Fair Value of Financial Instruments” for the definition of ~~level~~Level 2 of the fair value hierarchy.

In ~~January 2019,~~August 2020, the Company ~~borrowed $150.0~~issued an aggregate $400.0 million ~~under our Term Loan Agreement to partially finance~~of 0.25% Convertible Senior Notes due 2025, including the ~~OGSystems Acquisition.~~exercise of a $50.0 million initial purchasers’ option. The ~~Term Loan is comprised~~Company received proceeds from the issuance and sale of ~~Offshore Rate Loans~~the Convertible Senior Notes of $389.7 million, net of $10.3 million of transaction fees and ~~Base Rate Loans (each as defined in the Term Loan Agreement), with an initial aggregate principal amount of $150.0 million.~~other third-party offering expenses. The ~~Offshore Rate Loans bear~~Convertible Senior Notes accrue interest at a rate of 0.25% per annum, payable semi-annually on February 15 and August 15 of ~~LIBOR, divided by 1.00 minus~~each year beginning on February 15, 2021, and will mature on August 15, 2025, unless earlier repurchased, redeemed or converted.

The Convertible Senior Notes are the ~~Eurodollar Reserve Percentage,~~Company’s senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Notes; equal in

right of payment to any of the Company’s unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness, to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries

Each $1,000 of principal of the Notes will initially be convertible into 22.2913 shares of our common stock, which is equivalent to an initial conversion price of $44.86 per share, subject to adjustment upon the occurrence of specified events. On or after March 15, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date of the Convertible Senior Notes, holders may convert all or a portion of their Convertible Senior Notes, regardless of the conditions below.

Prior to the close of business on the business day immediately preceding March 15, 2025, the Notes will be convertible at the option of the holders thereof only under the following circumstances:

The Company may redeem all or any portion of the Convertible Senior Notes for cash, at its option, on or after August 21, 2023 and before the 51^st scheduled trading day immediately before the maturity date at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus ~~1.25%~~accrued and unpaid interest, but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for a specified period of time. In addition, calling any Convertible Senior Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Convertible Senior Note, in which case the conversion rate applicable to the conversion of that Convertible Senior Note will be increased in certain circumstances if it is converted after it is called for redemption.

Upon the occurrence of a fundamental change prior to the maturity date of the Convertible Senior Notes, holders of the Convertible Senior Notes may require the Company to repurchase all or a portion of the Convertible Senior Notes for cash at a price equal to 100% of the principal amount of the Convertible Senior Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

Upon conversion, the Company may settle the Convertible Senior Notes for cash, shares of the Company’s common stock, or a combination thereof, at the Company’s option. If the Company satisfies its conversion obligation solely in cash or through payment and delivery of a combination of cash and shares of the Company’s common stock, the amount of cash and shares of common stock due upon conversion will be based on a daily conversion value calculated on a proportionate basis for each trading day in a 50-trading day observation period.

Under existing GAAP at the time of issuance during 2020, convertible debt instruments that may be settled in cash on conversion were required to be separated into liability and equity components in a manner that reflects the issuer’s non-convertible debt borrowing rate. The carrying amount of the liability component is based on the fair value of a similar instrument that does not contain an equity conversion option. The carrying amount allocated to the equity component, which is recognized as a debt discount, represents the difference between the proceeds from the issuance of the notes and the fair value of the liability component of the notes. Based on this debt to equity ratio, debt issuance costs are then allocated to the liability and equity components in a similar manner. Accordingly, at issuance the Company allocated $336.1 million to the debt liability and $53.6 million to additional paid-in capital. The difference between the principal amount of the Convertible Senior Notes and the liability component, inclusive of issuance costs, represents the debt discount, which the Company amortized to interest expense over the term of the Convertible Senior Notes using an

effective interest rate of 3.25%. During the year ended December 31, 2020, the Company recognized interest expense of $4.4 million. As of December 31, 2020, the net carrying value of the Notes was $340.6 million.

In the first quarter of 2021, the Company early adopted ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Equity’s Own Equity (Subtopic 815-40)”. The ~~Base Rate Loans bear~~Company used the modified retrospective method which resulted in a reduction in non-cash interest expense and reclassification of equity component of the convertible senior notes of $55.0 million and equity component of the debt issuance costs of $1.4 million to liabilities on the consolidated balance sheet. The Company also adjusted the carrying amount of the convertible senior notes to what it would have been if the Company had applied ASU 2020-06 from the inception of the Notes and recorded the offset of the carrying amount adjustment of $3.7 million in retained earnings on January 1, 2021. During the three and six months ended June 30, 2021, the Company recognized interest expense of $0.7 million and $1.5 million, respectively. As of June 30, 2021, the carrying value of the Notes was $400.0 million.

In connection with the sale of the Convertible Senior Notes, the Company purchased a bond hedge designed to mitigate the potential dilution from the conversion of the Convertible Senior Notes. Under the five-year term of the bond hedge, upon a conversion of the bonds, the Company will receive the number of shares of common stock equal to the remaining common stock deliverable upon conversion of the Convertible Senior Notes if the conversion value exceeds the principal amount of the Notes. The aggregate number of shares that the Company could be obligated to issue upon conversion of the Convertible Senior Notes is approximately 8.9 million shares. The cost of the convertible note hedge transactions was $55.0 million.

The cost of the convertible note hedge was partially offset by the Company’s sale of warrants to acquire approximately 8.9 million shares of the Company’s common stock. The warrants were initially exercisable at a ~~rate~~price of at least $66.46 per ~~annum~~share and are subject to customary adjustments upon the occurrence of certain events, such as the payment of dividends. The Company received $13.8 million in cash proceeds from the sales of these warrants.

The bond hedge and warrant transactions effectively increased the conversion price associated with the Convertible Senior Notes during the term of these transactions from 35%, or $44.86, to 100%, or $66.46, at their issuance, thereby reducing the dilutive economic effect to shareholders upon actual conversion.

The bond hedges and warrants are indexed to, and potentially settled in, shares of the ~~sum~~Company’s common stock. The net cost of ~~(a)~~$41.2 million for the ~~highest~~purchase of ~~(1)~~ the ~~administrative agent’s reference rate; (2)~~bond hedges and sale of the ~~rate equal~~warrants was recorded as a reduction to ~~1.50% per annum above~~additional paid-in capital in the ~~Offshore Rate; and (3) the rate equal to 0.50% per annum above the latest federal funds rate, plus (b) 0.25%. On May 10, 2019,~~consolidated balance sheets.

At issuance, the Company ~~used proceeds from its May 8, 2019, initial public offering to repay the $150.0~~recorded a deferred tax liability of $16.2 million ~~outstanding balance under the Term Loan. Upon payment of the outstanding balance the loan was closed. Interest expense~~ related to the ~~term loan~~Convertible Senior Notes debt discount and the capitalized debt issuance costs. The Company also recorded a deferred tax asset of $16.5 million related to the convertible note hedge transactions and the tax basis of the capitalized debt issuance costs through additional paid-in capital. The deferred tax liability and deferred tax asset were included net in “Deferred tax assets” on the consolidated balance sheets. Upon adoption of ASU2020-06, the Company reversed the deferred tax liability of $13.9 million that the Company had recorded at issuance related to the Convertible Senior Note debt discount and recorded an additional deferred tax liability of $0.4 million related to the capitalized debt issuance costs. In addition, the Company recorded a $0.9 million adjustment to the deferred tax asset through retained earnings related to the tax effect of book accretion recorded in 2020 and reversed upon adoption.

On January 5, 2021, the Treasury Department and Internal Revenue Service issued final regulations which provide guidance on applying the limitations on the deductibility of business interest expense under IRC Section 163(j). On January 6, 2021, the government published final regulations under IRC Section 451. The final regulations include guidance related to (1) timing of income inclusion for taxpayers with an applicable financial statement using an accrual method of accounting under IRC Section 451(b), and (2) advance payments for goods, services, and certain other items under IRC Section 451(c). The Company is currently assessing the impact of the new regulations but does not expect any material impact to its consolidated financial statements.

The Company’s effective tax rate was ~~$1.4 million~~24.2% and 27.6% for the three months ended ~~March 31, 2019. There were no amounts outstanding during~~June 30, 2021 and 2020, respectively. The change in the ~~three~~effective tax rate was due primarily to an increase in untaxed income attributable to noncontrolling interests and a change in jurisdictional earnings. The Company’s effective tax rate for the six months ended ~~March~~June 30, ~~2018.~~

~~Amortization~~2021 and June 30, 2020 was 26.1% and 27.2%. The change in effective tax rate was due primarily to an increase in untaxed income attributed to noncontrolling interests and a change in jurisdictional earnings and partially offset by an increase of ~~debt issuance costs for all~~foreign tax losses which will not provide any tax benefit and a settlement of a state tax audit. The difference between the ~~Company’s debt~~effective tax rate and ~~credit facilities was approximately $0.1 million and $0.2 million~~the statutory U.S. Federal income tax rate of 21.0% for the three and six months ended ~~March~~June 30, ~~2018 and March 31, 2019, respectively.~~

~~Historically, the Company has elected~~2021 primarily relates to ~~be taxed under the provisions of Subchapter ”S” of the Internal Revenue Code for federal tax purposes. As a result, income has not been subject to U.S. federal income taxes or~~ state income taxes ~~in those states where the ”S” Corporation status is recognized. No provision or liability for federal or state income~~and a recorded valuation allowance on foreign tax has been provided in the consolidated financial statements except for those states where the ”S” Corporation status is not recognized and for the 1.5% California franchise tax to which the Company is also subject as a California “S” Corporation. The provision for income tax in the historical periods prior to the Company’s initial public offering consists of these taxes and certain foreign taxes where the Company is subject to tax.

In connection with the initial public offering 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 will have a material impact on the Company’s results of operations, financial condition and cash flows. The Company’s effective income tax rate will increase and net income will decrease since the Company will be subject to both federal and state taxes on our earnings.

The termination of the “S” Corporation status will be treated as a change in tax status under ASC 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. The Company estimates the effects of the change in tax

~~status based upon forecasted temporary differences for the year to be approximately $55 million to $61 million. This range is subject to revision based upon actual results.~~

As a Subchapter “S” corporation the effective tax rates for the quarters ended March 30, 2018 and March 31, 2019 were 15.54% and 12.35%, respectively. The decrease in the effective rate is principally the result of a change in the jurisdictional earnings.

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 regimecredits, partially offset 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 has had limited effect on our effective tax rate. However, after the Company revokes the “S” Corporation election, the Company expects to be subject to the federal and state rates, the GILTI tax rules and other changes in the rules under the TCJA.

Because of the complexity of the new GILTI tax rules, and the expected change in status, the Company will continue to evaluate the impact of this provision and the application of ASC 740, Income Taxes. 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 incomebenefits related to GILTI as a current-period expense when incurred (the "period cost method"), or (ii) factoring such amounts into a Company's measurement of its deferred taxes (the "deferred method"). The Company has elected the period cost method.untaxed income attributable to noncontrolling interests and federal research tax credits.

As of ~~March 31, 2019,~~June 30, 2021, the Company’s deferred tax assets ~~included~~were subject to a valuation allowance of ~~$ 6.7~~$31.3 million primarily related to foreign net operating loss carryforwards, foreign tax credit carryforwards, and capital losses that the Company has determined ~~were~~are not ~~more likely than not~~more-likely-than-not to be realized. The factors used to assess the likelihood of realization ~~were~~include: the past performance of the ~~related~~ entities, ~~our forecast~~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 June 30, 2021 and December 31, ~~2018 and March 31, 2019,~~2020, the liability for income taxes associated with uncertain tax positions was ~~$9.9~~$18.0 million and ~~$10.7~~$16.4 million, respectively. ~~In the normal course of business,~~It is reasonably possible that the Company ~~is subject to~~may realize a decrease in our uncertain tax ~~audit by several jurisdictions~~positions of approximately $0.2 million during the next 12 months as a result of various tax audits and closing tax years.

Although the Company believes its reserves for its tax positions are reasonable, the ~~outcomes which are~~final outcome of tax audits could be materially different, both favorably and unfavorably. It is reasonably possible ~~within~~that certain audits may conclude in the next ~~twelve~~12 months ~~including lapses~~and that the unrecognized tax benefits the Company has recorded in ~~statutes~~relation to these tax years may change compared to the liabilities recorded for these periods. However, it is not currently possible to estimate the amount, if any, of ~~limitations, could result in adjustments, but will not result in a material change in the liability for uncertain tax positions.~~such change.

~~We are~~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. ~~We believe~~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. ~~We record a~~A liability is recorded when ~~we believe that~~ 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 no0 claims or assessments outstanding which would materially affect ~~our~~the consolidated results of operations or ~~our~~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, itthe Company is ~~too soon~~unable to determine the probability of the outcome of the litigation or ~~assess the~~determine a potential range of loss, if any. The Company has also filed a ~~third party~~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.~~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, itthe Company is ~~too soon~~unable to determine the probability of the outcome of the litigation or ~~assess the~~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 ~~2009~~2013 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. The Company accrues a liability when management believes it is both probable that a liability has been incurred and the amount of loss or range of loss can be reasonably estimated. The Company records a corresponding receivable for costs covered under the insurance policies.

The Company’s principal retirement benefit plan is the ~~ESOP,~~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~~three years of credited service, or in the event(s) of reaching age 65, death or disability while an active employee of the Company. ~~All~~As of June 30, 2021 and December 31, 2020, total shares of the Company’s common stock ~~was acquired~~outstanding were 102,502,780 and 102,360,662, respectively, of which 72,288,913and 76,641,312, respectively, were held by the ESOP.

A participant’s interest in their ESOP ~~in conjunction with a reorganization in 1984, which was financed by the Company.~~

~~Upon~~account is redeemable upon certain events, including retirement, death, termination due to permanent disability, a severe financial hardship following termination of employment, certain conflicts of interest following termination of employment, or the exercise of diversification ~~rights,~~rights. Distributions from the ESOP of participants’ interests are made in ~~their ESOP accounts are redeemable at~~ the ~~current price per~~Company’s common stock based on quoted prices of a share of the ~~stock. Such per share prices are established by~~Company’s common stock on the ~~ESOP trustee, taking into account, among other things,~~NYSE. A participant will be able to sell such shares of common stock in the ~~advice of a third-party valuation consultant for the ESOP trustee, as well as the ESOP trustee’s knowledge~~market, subject to any requirements of the ~~Company, as of the end of the plan year preceding distribution.~~

Under the terms of the ESOP plan, when participants hold shares that are not readily tradeable, 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.federal securities laws.

Total ESOP contribution expense was ~~approximately $11.2~~$13.4 million and ~~$12.2~~$14.6 million for the three months ended ~~March~~June 30, ~~2018~~2021 and ~~March 31, 2019,~~June 30, 2020, respectively, and $26.5 million and $29.5 million for the six months ended June 30, 2021 and June 30, 2020, respectively. The expense is recorded in “Direct costs of contracts” and ~~“Indirect,~~“Selling, general and administrative expense” in the consolidated statements of income. The fiscal ~~2019~~2021 ESOP contribution has not yet been made. The amount is currently included in accrued liabilities.

At December 31, 2018 and March 31, 2019, 78,172,809 shares and 78,138,831 shares of the Company’s stock were held by the ESOP which the Company recorded at their aggregate redemption value of $1.9 billion. During the year ended December 31, 2018 and the three months ended March 31, 2019, the Company did not declare any dividends.

The Company also maintains a defined contribution plan (the “401(k) Plan”). Substantially all domestic employees are entitled to participate in the 401(k) Plan, subject to certain minimum requirements. The Company’s contribution to the

~~401(k) Plan for the three months ended March 30, 2018 and March 31, 2019 amounted to $4.7 million and $9.2 million, respectively.~~

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 March 31, 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.

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 1210 – Debt and Credit Facilities” that relate to project ventures are ~~approximately $76.8~~$67.5 millionand ~~$77.2~~$59.3 million at June 30, 2021 and December 31, ~~2018 and March 31, 2019,~~2020, 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.

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

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.

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~~joint ventures 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):

The Company received net distributions from and sale proceeds for its unconsolidated joint ventures ~~of $12.3 million and $8.1 million~~ for the three months ended ~~March~~June 30, ~~2018~~2021 and ~~March 31, 2019,~~June 30, 2020 of $1.5 million and $5.6 million, respectively, and $6.8 million and $12.1 million for the six months ended June 30, 2021 and June 30, 2020, respectively.

For the three and six months ended June 30, 2021, the Company recorded write-downs of $1.6 million and $5.1 million, respectively, on an unconsolidated joint venture in the Critical Infrastructure segment as a result of changes in estimates made by the managing partner. The write-downs decreased operating and net income by $1.6 million and $1.2 million, respectively for the three months ended June 2021. Operating and net income were decreased by $5.1 million and $3.8 million, respectively, for the six months ended June 30, 2021. The write-downs decreased diluted earnings per share by $0.01 and $0.03 for the three and six months ended June 30, 2021.

The Company often provides services to unconsolidated joint ventures and revenues include amounts related to recovering ~~overhead~~ costs for these services. ~~For the three months ended March 30, 2018 and March 31, 2019, revenues included $33.7 million and $33.6 million, respectively,~~Revenues related to services the Company provided to unconsolidated joint ~~ventures.~~ventures for the three months ended June 30, 2021 and June 30, 2020 were $40.5 million and $42.4 million, respectively, and for the six months ended June 30, 2021 and June 30, 2020 were $82.4 million and $82.8 million, respectively. For the three months ended ~~March~~June 30, ~~2018~~2021 and ~~March 31, 2019,~~June 30, 2020, the Company incurred ~~approximately $25.9~~$30.6 million and ~~$27.2~~$34.6 million, respectively, and for the six months ended June 30, 2021 and June 30, 2020, $61.9 million and $66.1 million, respectively, of reimbursable costs. Amounts included in the consolidated balance sheets related to services the Company provided to unconsolidated joint ventures isare as follows (in thousands):

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 June 30, 2021 and December 31, ~~2018 and March 31, 2019,~~2020, 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:

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:

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~~Refer to Notes to Consolidated Financial Statements included in the ~~pension plan in “Note 15 – Retirement and Other Benefit Plans” that are accounted~~Company’s Form 10-K for the year ended December 31, 2020 for a more complete discussion of the various items within the consolidated financial statements measured at fair value ~~by Level within~~and the methods used to determine fair ~~value hierarchy.~~

As described in “Note 15 – 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 March 31, 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.

As described in “Note 15 – 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 March 31, 2019, approximately 78,172,809 shares and 78,138,831 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. The redemption values are 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 following tables present a reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3) (in thousands):~~

~~Basic~~The following tables reconcile the denominator and numerator used to compute basic earnings per ~~common~~ share (“EPS”) to the denominator and numerator used to compute diluted EPS for the three and six months ended June 30, 2021 and June 30, 2020. Basic EPS is computed using the weighted average number of shares outstanding during the period and income available to shareholders.

Diluted ~~earnings per share (“EPS”)~~EPS is computed similar to basic EPS, except the income available to shareholders is adjusted to add back interest expense, after tax, related to the Convertible Senior Note, and the weighted average number of shares outstanding is ~~increased~~adjusted to ~~include~~reflect the dilutive effects of ~~outstanding stock options~~stock-based awards and ~~other~~shares underlying the Convertible Senior Note.

Convertible Senior Note dilution impact is calculated using the if-converted method which was required upon adoption of ASU 2020-06. As a result, the Company elected to adopt the if-converted method when the Convertible Senior Notes were issued during the third quarter of 2020. In connection with the offerings of the Notes, the Company entered into a convertible note hedge and warrants (see Note 10 Debt and Credit Facilities); however, the convertible note hedge is not considered when calculating dilutive shares given its impact is anti-dilutive. The impact of the bond hedge would offset the dilutive impact of the shares underlying the Convertible Senior Note. The warrants have a strike price above our average share price during the period and are out of the money and not included in the tables below.

Dilutive potential common shares include shares the Company could be obligated to issue from its Convertible Senior Notes and warrants (see Note 10 for further discussion) and stock-based awards. ~~There were no dilutive securities outstanding~~Shares to be provided to the Company from its bond hedge purchased concurrently with the issuance of Convertible Senior Notes are anti-dilutive and are not included in its diluted shares. Anti-dilutive stock-based awards excluded from the calculation of earnings per share for the three months ended ~~March~~June 30, ~~2018~~2021 and ~~March 31, 2019.~~June 30, 2020 were 9,271 and 4,939, respectively, and for the six months ended June 30, 2021 and June 30, 2020 were 1,644 and 4,066, respectively.

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

The net income available to shareholders to compute basic and diluted EPS were (in thousands):

The Company operates in ~~two~~2 reportable segments: Federal Solutions and Critical Infrastructure.

The Federal Solutions segment ~~is a high-end services provider~~provides advanced technical solutions to the U.S. government, delivering timely, cost-effective ~~solutions~~hardware, software and services for mission-critical projects. The segment provides advanced technologies, ~~including~~supporting national security missions in cybersecurity,

missile defense, ~~systems,~~ and ~~subsurface munitions detection, as well as~~ military facility modernization, logistics support, ~~chemical weapon~~hazardous material remediation and engineering services.

The Critical Infrastructure segment provides integrated ~~design~~engineering and ~~engineering~~management services for complex physical and digital infrastructure around the globe. The Critical Infrastructure segment is a technology innovator focused on next generation ~~infrastructure.~~digital systems and complex structures. Industry leading capabilities in ~~design~~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):

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, equity-based compensation, 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						Three Months Ended						Six Months Ended
Adjusted EBITDA attributable to Parsons Corporation	March 30, 2018			March 31, 2019			June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Federal Solutions	$	20,154		$	38,866		$	32,500		$	47,700		$	64,482		$	79,317
Critical Infrastructure		23,656			25,559			27,817			35,519			59,474			62,876
Adjusted EBITDA attributable to Parsons Corporation		43,810			64,425			60,317			83,219			123,956			142,193
Adjusted EBITDA attributable to noncontrolling interests		3,920			3,749			5,410			7,942			10,470			9,464
Depreciation and amortization		(9,009	)		(30,591	)		(34,635	)		(32,081	)		(69,308	)		(64,490	)
Interest expense, net		(3,258	)		(7,815	)		(4,758	)		(3,963	)		(9,201	)		(7,757	)
Income tax expense		(5,353	)		(1,886	)		(3,838	)		(11,891	)		(9,213	)		(16,975	)
Litigation-related expenses(a)		(2,330	)		-
Amortization of deferred gain resulting from sale-leaseback transactions(b)		1,813			-
Transaction-related costs(c)		(125	)		(9,355	)
Restructuring(d)		-			(2,218	)
HCM software implementation costs(e)		-			(2,912	)
Other(f)		(366	)		(11	)
Equity-based compensation expense								(4,921	)		(12,854	)		(11,901	)		(5,133	)
Transaction-related costs (a)								(4,086	)		2,485			(6,732	)		(9,526	)
Restructuring expense (b)								(73	)		(1,143	)		(150	)		(1,110	)
Other (c)								(1,389	)		(589	)		(1,880	)		(1,170	)
Net income including noncontrolling interests		29,102			13,386			12,027			31,125			26,041			45,496
Net income attributable to noncontrolling interests		3,815			3,645			5,325			7,826			10,300			9,224
Net income attributable to Parsons Corporation	$	25,287		$	9,741		$	6,702		$	23,299		$	15,741		$	36,272

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

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

The geographic location of revenue is determined by the location of the customer.

North America includes revenue ~~includes $540.5 million and $669.2 million of~~in the United States ~~revenue~~ for the three months ended ~~March~~June 30, ~~2018~~2021 and ~~March 31, 2019,~~June 30, 2020 of $656.2 million and $737.4 million, respectively and for the six months ended June 30, 2021 and June 30, 2020 of $1.3 billion and $1.5 billion, respectively.North America property and equipment, net includes ~~$79.9~~$100.5 million and ~~$86.2~~$109.6 million of property and equipment, net in the United States at June 30, 2021 and December 31, ~~2018 and March 31, 2019,~~2020, respectively.

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

On July 6, 2021, the Company completed its acquisition of BlackHorse Solutions, Inc. BlackHorse Solutions, Inc. expands Parsons’ capabilities and products in next-generation military, intelligence, and space operations, specifically in cyber electronic warfare, and information dominance. The purchase price of $203.0 million was paid in cash. We are in the process of finalizing the accounting for this transaction and expect to complete our preliminary allocation of the purchase price to the assets acquired and liabilities assumed by the end of the third quarter of 2021.

On ~~April 3, 2019,~~July 30, 2021, the ~~Company’s board~~Company completed its acquisition of ~~directors declared a cash dividend~~Echo Ridge LLC. Echo Ridge adds position, navigation, and timing devices; modeling, simulation, test, and measurement tools; and deployable software defined radio products and signal processing services to Parsons’ space portfolio. The purchase price of approximately $9.0 million was paid in cash. We are in the process of finalizing the accounting for this transaction and expect to complete our preliminary allocation of the purchase price to the ~~Company’s existing shareholder in~~assets acquired and liabilities assumed by 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~~end of the ~~Company declared a common stock dividend in a ratio~~third quarter 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 initial public offering 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 will not be entitled to receive any portion of the Stock Dividend.

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.~~10-K for the year ended December 31, 2020.

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.~~10-K for the year ended December 31, 2020. We undertake no obligation to revise publicly any forward-looking statements. Actual results may differ materially from those contained in any forward-looking statements.

In response to the COVID-19 pandemic, the Company has taken certain actions to continue to execute under our contracts with customers and allow our people to work safely. A substantial majority of our workforce transitioned to work-from-home status during the latter part of the quarter ended March 31, 2020, and these practices remain largely in effect as of the date of this filing. To date, we have experienced no material disruption in our work as a consequence of these changes in our work practices.

The Company has experienced an impact in the volume of work in both the Federal Solutions and Critical Infrastructure segments where customers have restricted access to certain project sites. We have not seen any substantive cancellations of previously awarded contracts. In the Federal Solutions segment, we have had some existing contracts extended. We continue to see several potential contract awards pushed out to a future date.

The Company received limited benefits associated with the CARES Act related to its work on certain US national security projects; however, the curtailment of work under these projects and the CARES Act benefits did not have a material impact on our financial condition or results of operations. The reimbursement period for Section 3610 of the CARES Act expired March 31, 2021.

The Company has provided additional disclosure around liquidity and capital resources which can be found in the “Liquidity and Capital Resources” section in Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q.

The Company anticipates substantially all of the Company’s subcontractors and material suppliers will be able to fulfill their contractual obligations and we do not expect a material impact from non-performance.

The ultimate impact from the COVID-19 pandemic is difficult to predict. While many uncertainties exist, we currently anticipate no material change in our financial condition or results of operations.

PARSONS CORPORATION Enabling a safer, smarter, and more interconnected world. Engineered solutions for complex physical and digital infrastructure challenges SEGMENTS KEY FACTS AND FIGURES Technology-driven solutions for defense and intelligence customers FINANCIAL SNAPSHOT $4B Total Revenue Trailing 12-Months (Q2 2020) $4B Contract Awards Trailing 12-Months (Q2 2020) 75+ Years Of History Federal Solutions 49% Critical Infrastructure 51% Federal Solutions 58% Critical Infrastructure 42% Federal Solutions Critical Infrastructure ~16K Employees 6% Revenue Growth Trailing 12-Months (Q2 2020) 1.0X Book-To-Bill Ratio Trailing 12-Months (Q2 2020) $7.7B Backlog As Of 6/30/2020 PARSONS CORPORATION.

We are a leading innovative technology provider ~~of technology-driven solutions~~ in the global defense, intelligence and critical infrastructure markets. We provide ~~technical design~~software and ~~engineering~~hardware products, technical services and ~~software~~integrated solutions to ~~address~~support our customers’ ~~challenges.~~missions. We have developed significant expertise and differentiated capabilities in key areas of cybersecurity, intelligence, missile defense, ~~military training~~C5ISR, space, geospatial, and ~~development,~~ connected ~~communities, physical infrastructure and mobility solutions.~~communities. 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.

We operate in two reporting segments, Federal Solutions and Critical Infrastructure. Our Federal Solutions business ~~is a high-end services and technology provider~~provides advanced technical solutions to the U.S. government. Our Critical Infrastructure business provides integrated ~~design~~engineering and ~~engineering~~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.

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):

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 ~~total~~year to-date value of new awards for the periods presented below (in thousands):

The change in new awards from year to year ~~in our Federal Solutions segment~~ is ~~primarily due to significant new awards in our legacy business and from business acquisitions. The change in new awards in our Critical Infrastructure segment was~~ primarily due to ordinary course ~~fluctuations.~~fluctuations in our business. 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. The change in new awards in our Federal Solutions segment for the three and six months ended June 30, 2021 when compared to the corresponding periods last year were primarily impacted by one significant contract awarded in the second quarter of 2021. The awards in Critical Infrastructure for the six months ended June 30, 2021 were impacted by several large contracts awarded in the first quarter of 2021.

Backlog includes (i) unissued ~~delivery~~task 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):

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~~term. 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 ~~$2.5~~$2.7 billion of our funded backlog at ~~March 31, 2019~~June 30, 2021 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~~Risk 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.~~10-K for the year ended December 31, 2020.

The changes in backlog in ~~our~~both the Federal Solutions ~~segment is~~and Critical Infrastructure segments were primarily from ~~business acquisition which contributed $1.3 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~~business and the ~~volume of awards issued in comparison~~impacts related to the ~~revenue generated from our existing contracts.~~Company’s awards discussed above.

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:

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.

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.

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.

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,~~Intelligence Community, including those related to cybersecurity, could impact our ability to perform in the markets we serve.

The industries we operate in consist of a large number of enterprises ranging from small, niche-oriented companies to ~~multi-billion dollar~~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.

On ~~May 31, 2018,~~November 19, 2020, we acquired ~~Polaris Alpha~~Braxton for ~~$489.1~~$309.5 million. ~~Polaris Alpha is an advanced, technology-focused provider~~Braxton operates at the forefront of ~~innovative mission solutions~~satellite operations, ground system automation, flight dynamics, and spacecraft and antenna simulation for ~~national security, intelligence~~the U.S. Department of Defense and ~~other U.S. federal customers.~~Intelligence Community. The acquisition was funded by cash ~~on-hand and borrowings under our Revolving Credit Facility.~~on-hand. The financial results of ~~Polaris Alpha~~Braxton have been included in our consolidated results of operations from ~~June 1, 2018~~November 19, 2020 onward.

On January 7, 2019, we 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.

Our results may be affected by variances as a result of weather conditions and contract award seasonality impacts that we experience across our businesses. ~~This pattern~~The latter issue 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~~task orders 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 U.S. federal government 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.

Historically, the Company has 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 has not been subject to U.S. federal income taxes or state income taxes in those states where the “S” Corporation status is recognized. No provision or liability for federal or state income tax has been provided in the Company’s consolidated financial statements except for those states where the “S” Corporation status is not recognized and for the 1.5% California franchise tax to which the Company are also subject as a California “S” Corporation. The provision for income tax in the historical periods prior to the initial public offering consists of these taxes.

In connection with the initial public offering 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 will have a material impact on the Company’s results of operations, financial condition and cash flows. The effective income tax rate will increase and net income will decrease since the Company will be subject to both federal and state taxes on our earnings.

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 ~~nonreimbursable~~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 ~~refer to~~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~~10-K for the year ended December 31, 2020 for a ~~further~~ description of our policies on revenue recognition.

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

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. Over time, we have experienced a relatively stable contract mix.

Our recognition of ~~profit~~revenue 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~~estimated cost or transaction price is determined to have an impact on contract profit, we record a positive or negative adjustment to ~~revenue and/or direct cost of contracts.~~revenue.

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~~our 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 ~~$33.7 million and $33.6 million for the three months ended March 30, 2018 and March 31, 2019, respectively~~amounts related to services we provided to our unconsolidated joint ~~ventures.~~ventures for the three months ended June 30, 2021 and June 30, 2020 of $40.5 million and $42.4 million, respectively, and for the six months ended June 30, 2021 and June 30, 2020 of $82.4 million and $82.8 million, respectively.

Operating costs and expenses primarily include direct costs of contracts and ~~indirect,~~selling, 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 ~~was $11.2 million and $12.2 million~~ for the three months ended ~~March~~June 30, ~~2018~~2021 and ~~March 31, 2019,~~June 30, 2020 was $13.4 million and $14.6 million, respectively, and for the six months ended June 30, 2021 and June 30, 2020 was $26.5 million and $29.5 million, respectively, and is recorded in “Direct cost of contracts” and ~~“Indirect,~~“Selling, 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,~~and materials (“pass-through costs”), travel expenses and other expenses incurred to perform on contracts.

~~Indirect,~~Selling, general and administrative expenses (“SG&A”) 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 primarily consist of interest income, interest expense and other income, ~~net and interest and other expense associated with claim on long-term contract.~~net.

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, Convertible 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.

The following table sets forth Adjusted EBITDA, Net Income Margin, and Adjusted EBITDA Margin for the three and six months ended ~~March~~June 30, ~~2018~~2021 and ~~March 31, 2019.~~June 30, 2020.

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.

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):

The following table sets forth our results of operations for the three and six months ended ~~March~~June 30, ~~2018~~2021 and ~~March 31, 2019~~June 30, 2020 as a percentage of revenue.

	Three Months Ended						Three Months Ended						Six Months Ended
	March 30, 2018			March 31, 2019			June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Revenues		100	%		100	%		100	%		100	%		100	%		100	%
Direct costs of contracts		79.9	%		79.0	%		77.4	%		76.5	%		76.9	%		77.9	%
Equity in earnings of unconsolidated joint ventures		1.5	%		1.1	%		1.1	%		0.4	%		1.0	%		0.5	%
Indirect, general and administrative expenses		16.4	%		19.6	%
Selling, general and administrative expenses								21.4	%		19.2	%		21.4	%		19.0	%
Operating income		5.2	%		2.5	%		2.3	%		4.7	%		2.6	%		3.6	%
Interest income		0.1	%		0.1	%		0.0	%		0.0	%		0.0	%		0.0	%
Interest expense		-0.5	%		-0.9	%		-0.6	%		-0.4	%		-0.5	%		-0.4	%
Other income, net		0.2	%		0.0	%		0.0	%		0.1	%		-0.1	%		0.0	%
(Interest and other expense) gain associated with claim on long-term contract		-0.3	%		0.0	%
Total other income (expense)		-0.6	%		-0.9	%		-0.5	%		-0.3	%		-0.6	%		-0.4	%
Income before income tax provision		4.6	%		1.7	%
Income tax provision		-0.7	%		-0.2	%
Income before income tax expense								1.8	%		4.4	%		2.0	%		3.2	%
Income tax benefit (provision)								-0.4	%		-1.2	%		-0.5	%		-0.9	%
Net income including noncontrolling interests		3.9	%		1.5	%		1.4	%		3.2	%		1.5	%		2.3	%
Net income attributable to noncontrolling interests		-0.5	%		-0.4	%		-0.6	%		-0.8	%		-0.6	%		-0.5	%
Net income attributable to Parsons Corporation		3.4	%		1.1	%		0.8	%		2.4	%		0.9	%		1.9	%

Revenue ~~increased~~decreased $100.1 million for the three months ended ~~March 31, 2019~~June 30, 2021 when compared to ~~March 30, 2018~~the corresponding period last year, primarily due to ~~an increase~~a decrease in revenue in our Critical Infrastructure segment of $60.6 million and a decrease in our Federal Solutions segment of ~~$131.5~~$39.5 million. Revenue decreased $196.4 million ~~and from~~for the six months ended June 30, 2021 when compared to the corresponding period last year, primarily due to a decrease in our Critical Infrastructure segment of ~~$18.2~~$131.4 million and a decrease in our Federal Solutions segment of $65.0 million. See ~~“—Segment~~“Segment Results” below for a further discussion.

Direct cost of contracts ~~increased~~decreased $69.0 million for the three months ended ~~March 31, 2019~~June 30, 2021 when compared to ~~March 30, 2018~~the corresponding period last year, primarily due to ~~an increase~~decreases of ~~$93.2~~$39.6 million in our Critical Infrastructure segment and $29.4 million in our Federal Solutions ~~segment and from an increase of $18.1 million~~segment. The decrease in our Critical Infrastructure ~~segment.~~segment was primarily due to a decrease in business volume, particularly the winding down of several programs with high levels of pass-through costs. The ~~increase~~decrease in our Federal Solutions segment was primarily due ~~primarily from~~to a decrease in business ~~acquisitions which added $91.3 million.~~ volume.

Direct cost of contracts decreased $169.5 million for the six months ended June 30, 2021 when compared to the corresponding period last year, primarily due to decreases of $111.2 million in our Critical Infrastructure segment ~~increased $18.1~~and $58.3 million in our Federal Solutions segment. The decrease in our Critical Infrastructure segment was primarily due to ~~an increase~~a decrease in business volume, ~~under existing contracts.~~particularly the winding down of several programs with high levels of pass-through costs. The decrease in our Federal Solutions segment was primarily due to a decrease in business volume.

Equity in earnings of unconsolidated joint ventures ~~decreased~~increased $5.7 million and $7.1 million for the three and six months ended ~~March 31, 2019 when~~June 30, 2021 compared to ~~March 30, 2018~~the corresponding periods last year, primarily ~~due~~related to ~~timing of the completion of~~new joint ventures, and ~~the starting of new~~increased activity and margins in certain existing joint ventures, ~~as part~~partially offset by write-downs of ~~ordinary course timing fluctuations~~$1.6 million and $5.1 million for the three and six months ended June 30, 2021, respectively, on an unconsolidated joint venture in ~~our business.~~the Critical Infrastructure segment and reductions in activity on others.

~~Indirect,~~Selling, general and administrative expenses (“IGSG&A”) ~~increased~~ for the three months ended ~~March 31, 2019 when compared to March~~June 30, ~~2018 primarily due to our Federal Solutions segment, most~~2021 and June 30, 2020 include $4.9 million and $12.9 million, respectively, and for the six months ended June 30, 2021 and June 30, 2020 include $11.9 million and $5.1 million, respectively, of ~~which is~~compensation cost related to additional expenses of $18.9 million from business acquisitions, $20.4 million from the amortization of intangible assets related to our acquisitions and $9.4 million in acquisition-related expenses. In our Critical Infrastructure segment, expenses increased in-line with the increase in business volume.

Equity awards issued prior to the Company’s IPO were settled in cash and were remeasured to an updated fair value at each reporting period until the award was settled. Compensation cost was trued-up at each reporting period for changes in fair value pro-rated for the portion of the requisite service period rendered. Prior to the IPO on May 8, 2019, the fair value of a share of the Company’s common stock was established by the ESOP trustee. See “Note 19 – Fair Value of Financial Instruments” in the Company’s Form 10-K for the year ended December 31, 2020 for a further discussion of how a share of the Company’s common stock was valued prior to the IPO. Subsequent to the IPO, the share price of the Company’s common stock is based on quoted prices on the New York Stock Exchange.

~~The increase in interest expense~~Excluding the compensation costs discussed above, SG&A for the three months ended ~~March 31, 2019~~June 30, 2021 and June 30, 2020 was $183.3 million and $174.8 million, respectively and for the six months ended June 30, 2021 and June 30, 2020 was $363.9 million and $366.3 million, respectively.

The increase in SG&A of $8.5 million, exclusive of equity compensation cost, for the three months ended June 30, 2021 when compared to ~~March~~the corresponding period last year was primarily due to a $6.3 million increase in transaction-related costs, a $5.4 million increase from acquisitions, and a $2.4 million increase in intangible asset amortization. These increases were partially offset by a $1.0 million decrease in restructuring costs and $4.6 million decrease in other costs.

The decrease in SG&A of $2.4 million, exclusive of equity compensation cost, for the six months ended June 30, ~~2018~~2021 when compared to the corresponding period last year was primarily due to a $3.3 million decrease in transaction-

related costs, a $1.0 million decrease in restructuring costs and $13.0 million decrease in other costs. These were partially offset by a $10.7 million increase from acquisitions and a $4.2 million increase in intangible asset amortization.

Interest income is related to interest earned on cash balances held. Interest expense is primarily due to ~~an increase in~~ debt related to our business ~~acquisitions.~~acquisitions and Convertible Senior Note. The amounts in other income (expense), net ~~relate~~are primarily related to transaction gains and losses on foreign currency transactions and sublease income.

~~Interest and other expense associated with claim on long-term contract relates to a lawsuit against a joint venture in which the Company is the managing partner. Please see “Note 15 –~~ ~~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~~The Company’s effective tax ~~expense decreased~~rate was 24.2% and 27.6% for the three months ended ~~March 31, 2019 when compared to March~~June 30, ~~2018 primarily due to a reduction~~2021 and 2020, respectively. The change in ~~pre-tax earnings in the foreign jurisdictions in which we operate.~~

Historically, the Company recognized income taxes as an “S” Corporation for federal and state income tax purposes and, therefore, with the exception of a limited number of state and local jurisdictions, income has not been subject to income taxes. As a Subchapter “S” corporation the effective tax ~~rates~~rate was due primarily to an increase in untaxed income attributable to noncontrolling interests and a change in jurisdictional earnings. The Company’s effective tax rate for the six months ended June 30, 2021 and June 30, 2020 was 26.1% and 27.2%, respectively. The change in effective tax rate was due primarily to an increase in untaxed income attributed to noncontrolling interests and a change in jurisdictional earnings, partially offset by an increase in foreign tax losses which will not provide any tax benefit and a settlement of a state tax audit. The difference between the effective tax rate and the statutory U.S. Federal income tax rate of 21.0% for the three and six months ended ~~March~~June 30, ~~2018~~2021 primarily relates to state income taxes and ~~March 31, 2019 were 15.54% and 12.35%, respectively.~~

~~In connection with the Company’s initial public offering~~a recorded valuation allowance on May 8, 2019, we converted to a “C” Corporation. On a pro forma basis, if the Company had been taxed as a “C” Corporation for the three months ended March 30, 2018 and March 31, 2019 the Company’s assumed combined federal, state, local and foreign ~~effective income~~ tax ~~rate would have been 33.02% and 31.29%, respectively and income tax expense would have been $11.4 million and $4.8 million, respectively.~~

The termination for the “S” Corporation status will be 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 recordedcredits, partially offset by benefits related to income ~~from continuing operations on the date the “S” Corporation status terminates. The Company is estimating that the effects of the change in~~attributable to noncontrolling interests and federal research tax ~~status based upon our forecasted temporary differences for the year to be approximately $55 million to $61 million. This range is subject to revision based upon actual results.~~credits.

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 ~~20—~~18—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:

The ~~increase~~decrease in Federal Solutions revenue for the three and six months ended June 30, 2021 compared to the corresponding periods last year was primarily due to a decrease in business ~~acquisitions which added $122.4 million. Federal Solutions legacy revenue increased $9.1 million.~~volume from program completions and wind-downs, a reserve taken on a program, and the competitive hiring environment for cleared personnel. The decreases were partially offset by increases from business acquisition of $29.3 million and $60.3 million for the three and six months ended June 30, 2021, respectively.

The ~~increase~~decrease in Federal Solutions Adjusted EBITDA attributable to Parsons Corporation for the three and six months ended June 30, 2021 compared to the corresponding periods last year was primarily ~~due~~related to a $6.9 million net impact from a reserve taken on a program during the second quarter of 2021, compared to a $9.0 million incentive fee recognized during the second quarter of 2020 in addition to decline in business ~~acquisitions and improved profit margins.~~volume.

The ~~increase~~decrease in Critical Infrastructure revenue for the three and six months ended June 30, 2021 compared to the corresponding periods last year was primarily ~~related~~due to ~~revenue growth~~a decrease in business volume from program completions and a write down on ~~existing contracts.~~a project during the second quarter of 2021.

The ~~increase~~decrease in ~~Critical Infrastructure~~ Adjusted EBITDA attributable to Parsons Corporation in Critical Infrastructure for the three and six months ended June 30, 2021 was primarily ~~due~~related to a ~~reduction~~$15.4 million write down on a project, partially offset by an increase in ~~IG&A.~~equity in earnings of unconsolidated joint ventures.

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

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.

WeAs of June 30, 2021, 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~~on-hand and our borrowing capacity under our Revolving Credit Facility. We do not anticipate that the COVID-19 pandemic-related economic impacts will impair our ability to continue to maintain compliance with our debt covenants or access available borrowing capacity from our banks.

During July 2021, we paid the $50 million Series A tranche of our Senior Note which had a scheduled maturity of July 15, 2021. See “Note 10—Debt and Credit Facilities” in the notes to the consolidated financial statements in this Form 10-Q for further information.

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.~~fixed-price. 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~~We focus on collecting outstanding receivables to reduce Net DSO and working capital. Net DSO was 7568 days at ~~March~~June 30, ~~2018~~2021 and 6169 days at ~~March 31, 2019.~~June 30, 2020. The decrease in DSO was primarily due to strong cash collections during the second quarter of 2021. Our working capital (current assets less current liabilities) was ~~$482.6~~$717.0 million at June 30, 2021 and $655.7 million at December 31, ~~2018 and $242.3 million at March 31, 2019.~~2020.

Our cash, cash equivalents and restricted cash decreased by ~~$150.7~~$2.6 million to ~~$130.5~~$484.6 million at ~~March 31, 2019~~June 30, 2021 from ~~$281.2~~$487.2 million at ~~March 30, 2018.~~December 31, 2020.

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

Net cash provided by (used in) operating activities ~~consist~~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, and provisions for doubtful ~~accounts, amortization of deferred gains, and impairment charges.~~accounts. 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.

Net cash ~~used in~~provided by operating activities ~~decreased $5.3 million to $60.1~~increased $69.9 million for the ~~three~~six months ended ~~March 31, 2019~~June 30, 2021 compared to ~~$65.4 million for~~ the ~~three~~six months ended ~~March~~June 30, ~~2018.~~2020. The ~~decrease~~change in net cash ~~used in~~from operating activities is ~~primarily due~~attributable to a ~~$23.6~~$71.6 million ~~improvement~~increase in cash ~~flows~~inflows from our working capital accounts (primarily from accounts receivable and contract liabilities offset by accrued expenses, accounts payable and contract assets) and a ~~$4.6~~$17.6 million ~~increase~~change in other long-term liabilities, partially offset by a $19.4 million decrease in net income after adjusting for non-cash items. These positive changes in operating cash flows were offset, in part, by a $22.9 million change in the use of cash related to other long-term liabilities, primarily related to our insurance reserves. Net DSOs improved from 75 days to 61 days primarily driven by the increase in the Company’s revenue from business acquisitions.

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

Net cash used in investing activities ~~increased $292.9 million to $301.1~~decreased $6.0 million for the ~~three~~six months ended ~~March 31, 2019,~~June 30, 2021, when compared to ~~$8.2 for~~ the ~~three~~six months ended ~~March~~June 30, ~~2018,~~2020, primarily due to ~~the use~~proceeds from sale of ~~$287.5~~investments in unconsolidated joint ventures of $14.3 million ~~net~~and a decrease in cash used for capital expenditures of ~~cash acquired, for the acquisition~~$13.8 million, partially offset by increased investments in unconsolidated joint ventures of ~~OGSystems.~~$22.5 million. The Company had no business ~~acquisition activity~~acquisitions during the ~~quarter~~six months ended ~~March~~June 30, ~~2018.~~2021 and June 30, 2020.

Net cash provided by financing activities is primarily associated with proceeds from debt, the repayment thereof, and distributions to noncontrolling ~~interests and payments to the ESOP~~interests.

Net cash used in ~~connection with the redemption of ESOP participants’ interests. We spent $0.4 million and $0.8~~financing activities increased $21.4 million for the ~~three~~six months ended ~~March~~June 30, ~~2018 and March 31, 2019 respectively,~~2021 compared to the six months ended June 30, 2020. The change in ~~connection with the redemption of ESOP participants’ interests. With a public market for the Company’s common stock,~~ cash ~~will no longer be required for ESOP redemptions following the 180-day lock-up period which ends November 4, 2019.~~

~~Net cash provided by~~flows from financing activities ~~increased $204.5 million to $210.6 million for the three months ended March 31, 2019 when compared to $6.1 million for the three months ended March 30, 2018,~~is primarily due to ~~an increase~~

in borrowings under our Credit Agreement of $230.0 million, net of $60.0 million of repayments used primarily to pay for the Company’s business acquisitions. These cash flows provided by financing activities were offset, in part, by an increase of $24.8 million oflarger distributions ~~net~~ to noncontrolling interests.

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 ~~$227.7~~to $219.2 million as of ~~March 31, 2019, including $48.8 million of letters~~June 30, 2021. Letters of credit outstanding under the Credit ~~Agreement.~~Agreement total $45.0 million.

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.

As of ~~March 31, 2019,~~June 30, 2021, 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.

We are exposed to interest rate risks related to ~~both~~ the Company’s Revolving Credit ~~Facility and our Term Loan Agreement. Borrowings~~Facility. As of June 30, 2021, there were no amounts outstanding under the Revolving Credit Facility. Borrowings under the new Credit Facility effective June 2021 bear interest at ~~our option, at~~ either ~~(i) the Base Rate~~a eurocurrency rate plus a margin between 1.0% and 1.625%, or a base rate (as defined in the ~~Revolving~~ Credit ~~Facility)~~Agreement) plus a margin of between 0% and 0.625%, both based on the leverage ratio of the Company at the end of each quarter.Prior to June 2021, interest on borrowings under the Credit Facility were at either the base rate (as defined in the Credit Agreement), plus an applicable margin, or ~~(ii)~~ LIBOR plus an applicable margin. AsThe applicable margin for base rate loans was a range of 0.125% to 1.00% and the applicable margin for LIBOR loans was a range of 1.125% to 2.00%, both based on the leverage ratio of the Company at the end of each quarter. The rates on June 30, 2021 and December 31, 2018, we had outstanding borrowings under the Revolving Credit Facility of $180.0 million. Based on the $180.0 million outstanding under the Credit Agreement, an increase or decrease of 100 basis points in the Base Rate and/or LIBOR rates would result in an increase or decrease in annual interest expense of approximately $1.8 million. Borrowing under our Term Loan is comprised of Offshore Rate Loans2020 were 1.34% and ~~Base Rate Loans (each as defined in the Term Loan Agreement)~~1.87%, with an initial aggregate principal amount of $150.0 million. The Offshore Rate Loans bear interest at a rate per annum of LIBOR, divided by 1.00 minus the Eurodollar Reserve Percentage, plus 1.25%. The Base Rate Loans bear interest at a rate per annum of the sum of (a) the highest of (1) the administrative agent’s reference rate; (2) the rate equal to 1.50% per annum above the Offshore Rate; and (3) the rate equal to 0.50% per annum above the latest federal funds rate, plus (b) 0.25%. Based on the $150.0 million outstanding principal balance under the Term Loan, an increase or decrease of 100 basis points in the Term Loan’s applicable interest rate would result in an increase or decrease in annual interest expense of approximately $1.5 million. The Term Loan has a maturity date of January 3, 2020 and we used the proceeds from the May 8, 2019 initial public offering to pay off the full outstanding balance under the Term Loan.respectively.

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.

Our management carried out, as of ~~March 31, 2019 ,~~June 30, 2021, 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 ~~March 31, 2019 ,~~June 30, 2021, 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.

~~On January 1, 2019~~During the ~~Company adopted ASU 2016-02, “Leases”. In connection with the adoption, the Company implemented certain changes to our processes, systems, and controls. There~~second quarter of 2021, there were no ~~other~~ 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.

The information required by this Item 1 is included in “Note 1412 – ~~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.

There have been no material changes from our Risk Factors disclosed in the Company’s Form ~~S-1/A filed~~10-K for the year ended December 31, 2020 other than as set forth below. See also our updates for the COVID-19 pandemic included in Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-Q.

In 2021, President Joseph R. Biden, released the Made in America Tax Plan that proposed several significant modifications to key provisions, as well as introduced new provisions, to the U.S. internal revenue code. Although it is uncertain if some or all of the identified provisions will be enacted, a change in U.S. tax law may materially and adversely impact our income tax liability, provision for income taxes, and effective tax rate.

Our business, results of operations, financial condition, cash flows and stock price can be adversely affected by pandemics, epidemics or other public health emergencies, such as the recent outbreak of COVID-19 which has spread from China to many other countries including the United States. In March 2020, the World Health Organization characterized COVID-19 as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The outbreak has resulted in governments around the world implementing increasingly stringent measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home" orders, travel restrictions, business curtailments, school closures, and other measures. In addition, governments and central banks in several parts of the world have enacted fiscal and monetary stimulus measures to counteract the impacts of COVID-19.

Although we have continued our operations consistent with federal guidelines and state and local orders, the outbreak of COVID-19 and any preventive or protective actions taken by governmental authorities may have a material adverse effect on ~~April 29, 2019.~~our operations, employees and customers, including business shutdowns or disruptions. The extent to which COVID-19 may adversely impact our business depends on future developments, which are highly uncertain and unpredictable, depending upon the severity and duration of the outbreak and the effectiveness of actions taken globally to contain or mitigate its effects. Any resulting financial impact cannot be estimated reasonably at this time but may materially adversely affect our ability to collect accounts receivables and our business, results of operations, financial condition and cash flows. Even after the COVID-19 pandemic has subsided, we may experience materially adverse impacts to our business due to any resulting economic recession or depression. Additionally, concerns over the economic impact of COVID-19 have caused extreme volatility in financial and other capital markets which has and may continue to adversely impact our stock price and our ability to access capital markets. To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in our Form 10-K for the year ended December 31, 2020, such as those relating to government spending and priorities.

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.

Delaware	95-3232481
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

5875 Trinity Parkway #300 ~~Centerville,~~Centreville, Virginia	20120
(Address of principal executive offices)	(Zip Code)

		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 ~~Shareholder’s~~Shareholders’ Equity	5
	Notes to Unaudited Consolidated Financial Statements	67
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2726
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3940
Item 4.	Controls and Procedures	3940
PART II.	OTHER INFORMATION	41
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	4142
Item 6.	Exhibits	41
~~Signatures~~		42
	Signatures	43

	Amount
Cash and cash equivalents	$	7,006
Accounts receivable		18,163
Contract assets		8,350
Prepaid expenses and other current assets		3,036
Property and equipment		5,114
Right of use assets, operating leases		10,788
Goodwill		212,185
Intangible assets		74,950
Accounts payable		(7,464	)
Accrued expenses and other current liabilities		(9,845	)
Contract liabilities		(300	)
Short-term lease liabilities, operating leases		(1,915	)
Long-term lease liabilities, operating leases		(8,873	)
Deferred tax liabilities		(1,694	)
Net assets acquired	$	309,501

	Three Months Ended
	March 30, 2018
Pro forma revenue	$	840,487
Pro forma net income	$	10,532

	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		183,567
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		(931	)
Long-term lease liabilities, operating leases		(8,021	)
Other long-term liabilities		(1,015	)
Net assets acquired	$	292,380

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

										Accumulated
	Redeemable									Other			Total
	Common			Treasury			Retained			Comprehensive			Parsons			Noncontrolling
	Stock			Stock			Earnings			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								9,741						9,741			3,645			13,386
Foreign currency translation gain											2,547			2,547						2,547
Pension adjustments											9			9						9
ASC 842 transition adjustment								52,608						52,608						52,608
Purchase of treasury stock		(813	)		(813	)		813						-						-
Distributions, net of contributions														-			(18,278	)		(18,278	)
ESOP shares at redemption value		(164	)					164						164						164
Balance at March 31, 2019	$	1,875,332		$	(957,838	)	$	75,771		$	(20,401	)	$	(902,468	)	$	31,828		$	(870,640	)

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								25,287						25,287			3,815			29,102
Foreign currency translation gain (loss)											(2,781	)		(2,781	)		(3	)		(2,784	)
Pension adjustments											(19	)		(19	)					(19	)
Adoption of ASC 606								(4,735	)					(4,735	)		103			(4,632	)
Purchase of treasury stock		(367	)		(367	)		367						-						-
Contributions, net of distributions														-			6,497			6,497
Balance at March 30, 2018	$	1,854,938		$	(876,738	)	$	(165,116	)	$	(17,803	)	$	(1,059,658	)	$	37,906		$	(1,021,752	)

	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

	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

	December 31, 2018		March 31, 2019		$ change		% change			June 30, 2021		December 31, 2020		$ change			% change
Contract assets	$	515,319	$	571,755	$	56,436		11.0	%	$	568,239	$	576,568	$	(8,329	)		-1.4	%
Contract liabilities		208,576		225,017		16,441		7.9	%		196,547		201,864		(5,317	)		-2.6	%
Net contract assets (liabilities) (1)	$	306,743	$	346,738	$	39,995		13.0	%	$	371,692	$	374,704	$	(3,012	)		-0.8	%

	2021			2020
Billed	$	458,686		$	512,357
Unbilled		183,293			190,222
Total accounts receivable, gross		641,979			702,579
Allowance for doubtful accounts		(3,999	)		(4,001	)
Total accounts receivable, net	$	637,980		$	698,578

Period RUPO Will Be Satisfied	Within One Year		Within One to Two Years		Thereafter		Within One Year		Within One to Two Years		Thereafter
Federal solutions	$	982,972	$	577,405	$	324,510
Critical infrastructure		1,560,074		783,585		1,098,715
Federal Solutions							$	1,071,149	$	461,928	$	355,680
Critical Infrastructure								1,581,878		760,048		861,020
Total	$	2,543,046	$	1,360,990	$	1,423,225	$	2,653,027	$	1,221,976	$	1,216,700

	Three Months Ended
	March 31, 2019
Operating cash flows for operating leases	$	18,333
Operating cash flows for financing activities		16
Financing cash flows for finance leases		246
Right-of-use assets operating leases		249,848
Right-of-use assets financing leases	$	1,341

	Three Months Ended
	March 31, 2019			June 30, 2021			December 31, 2020
Operating Leases:
Right-of-use assets	$	216,484		$	194,484		$	210,398
Lease liabilities:
Current	$	53,029		$	53,997		$	54,133
Long-term		181,274			164,754			182,467
Total operating lease liabilities	$	234,303		$	218,751		$	236,600
Finance Leases:
Other noncurrent assets	$	1,341		$	3,414		$	3,363
Accrued expenses and other current liabilities	$	521		$	1,598		$	1,461
Other long-term liabilities	$	798		$	1,618		$	1,733

Weighted Average Remaining Lease Term:
Operating leases	6 years			4.7 Years			5 years
Finance leases	3 years			2.5 years			3 years
Weighted Average Discount Rate:
Operating leases		4.5	%		3.6	%		3.7	%
Finance leases		4.5	%		3.0	%		3.8	%

	December 31, 2018		Acquisitions		Foreign Exchange		March 31, 2019		December 31, 2020		Acquisitions			Foreign Exchange		June 30, 2021
Federal Solutions	$	666,841	$	183,500	$	-	$	850,341	$	1,188,882	$	(1,292	)	$	-	$	1,187,590
Critical Infrastructure		70,097		-		659		70,756		73,096		-			2,374		75,470
Total	$	736,938	$	183,500	$	659	$	921,097	$	1,261,978	$	(1,292	)	$	2,374	$	1,263,060

	March 31, 2019		June 30, 2021
2019 (remaining)	$	61,883
2020		72,542
2021		68,401	$	48,806
2022		25,808		52,230
2023		15,999		38,595
2024				12,273
2025				9,713
Thereafter		6,315		34,568
Total	$	250,948	$	196,185

	December 31, 2018			March 31, 2019			Useful lives (years)	June 30, 2021			December 31, 2020			Useful life (years)
Buildings and leasehold improvements	$	54,348		$	61,631		1-15	$	97,167		$	98,151		1-15
Furniture and equipment		81,705			86,174		3-10		88,403			91,036		3-10
Computer systems and equipment		148,255			152,558		3-10		164,302			160,305		3-10
Construction equipment		12,074			11,832		5-7		8,635			8,920		5-7
Construction in progress									9,032			9,202
									367,539			367,614
Accumulated depreciation		(204,533	)		(214,896	)			(256,922	)		(246,587	)
Property and equipment, net	$	91,849		$	97,298			$	110,617		$	121,027

							June 30, 2021			December 31, 2020
Short-Term:
Senior notes							$	50,000		$	50,000
Total Short-Term								50,000			50,000
Long-Term:	December 31, 2018			March 31, 2019
Revolving credit facility	$	180,000		$	260,000
Senior notes		250,000			250,000			200,000			200,000
Convertible senior notes								400,000			400,000
Debt discount								-			(51,138	)
Debt issuance costs		(836	)		(789	)		(9,124	)		(8,864	)
Total long-term		429,164			509,211			590,876			539,998
Short-Term:
Term Loan		-			150,000
Debt issuance costs		-			(214	)
Total Short-Term		-			149,786
Total Debt	$	429,164		$	658,997		$	640,876		$	589,998

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

December 31, 2108	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

March 31, 2109	Level 1		Level 2		Level 3		Total
Mutual funds	$	2,715	$	-	$	-	$	2,715
Fixed income		-		10,689		-		10,689
Cash and cash equivalents		264		-		-		264
	$	2,979	$	10,689	$	-	$	13,667

Balance at December 31, 2018	$	1,876,309
Purchases of treasury stock		(813	)
Share price adjustment		(164	)
Balance at March 31, 2019	$	1,875,332

	June 30, 2021		June 30, 2020
Awards (year to date)	$	2,692,557	$	1,971,186
Backlog (1)	$	8,412,208	$	7,718,690
Book-to-Bill (year to date)		1.5		1.0

	Three Months Ended				Variance						Three Months Ended				Variance						Six Months Ended				Variance
	March 30, 2018		March 31, 2019		Dollar			Percent			June 30, 2021		June 30, 2020		Dollar			Percent			June 30, 2021		June 30, 2020		Dollar			Percent
Federal Solutions Adjusted EBITDA attributable to Parsons Corporation	$	20,154	$	38,866	$	18,712			92.8	%	$	32,500	$	47,700	$	(15,200	)		-31.9	%	$	64,482	$	79,317	$	(14,835	)		-18.7	%
Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation		23,656		25,559		1,903			8.0	%		27,817		35,519		(7,702	)		-21.7	%		59,474		62,876		(3,402	)		-5.4	%
Adjusted EBITDA attributable to noncontrolling interests		3,920		3,749		(171	)		-4.4	%		5,410		7,942		(2,532	)		-31.9	%		10,470		9,464		1,006			10.6	%
Total Adjusted EBITDA	$	47,730	$	68,174	$	20,444			42.8	%	$	65,727	$	91,161	$	(25,434	)		-27.9	%	$	134,426	$	151,657	$	(17,231	)		-11.4	%

	Three Months Ended						Variance
(U.S. dollars in thousands)	March 30, 2018			March 31, 2019			Dollar			Percent
Interest income	$	741		$	477		$	(264	)		-35.6	%
Interest expense		(3,999	)		(8,292	)		(4,293	)		107.4	%
Other income, net		1,152			41			(1,111	)		-96.4	%
Interest and other expense associated with claim on long-term contract		(2,330	)		-			2,330			-100.0	%
Total other expense	$	(4,436	)	$	(7,774	)	$	(3,338	)		75.2	%

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~~101		~~XBRL Instance Document~~The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Earnings, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.

~~101.SCH~~104		Cover Page Interactive Data File (formatted as inline 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~~with applicable taxonomy extension information contained in Exhibits 101).

	~~Company Name~~Parsons Corporation

Date: ~~June 18, 2019~~August 4, 2021	By:	/s/ George L. Ball
		George L. Ball
		Chief Financial Officer
		(Principal Financial Officer)