PARSONS CORP 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures Our management carried out, as of December 31, 2025, 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 December 31, 2025, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports we 82 file or submit 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. Management’s Annual Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining for the Company adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. Management, with the participation of its Chair and Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025 based on the framework established in “Internal Control—Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on this assessment, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2025. The Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP, which audited the Company’s consolidated financial statements included in this Annual Report on Form 10-K, also audited the effectiveness of our internal control over financial reporting as of December 31, 2025, as stated in their audit report included in this Annual Report on Form 10-K. Consistent with the guidance issued by the Securities and Exchange Commission Staff, management has excluded TRS Group, Inc. ("TRS"), Chesapeake Technology International, Corp ("CTI"), and Applied Sciences Consulting, Inc. ("ASC") from its assessment of internal controls over financial reporting as of December 31, 2025. TRS Group is a wholly owned subsidiary, which we acquired on January 31, 2025, Chesapeake Technology International is a wholly owned subsidiary, which we acquired on June 30, 2025, and Applied Science Consulting is a wholly owned subsidiary, which we acquired on October 1, 2025, all combined, have total assets and revenue of 0.8% and 1.1%, respectively of the related consolidated financial statement amounts as of and for the year ended December 31, 2025. Changes in Internal Control Over Financial Reporting There have been no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, that occurred during the quarter ended December 31, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. Insider Trading Relationships and Policies During the fiscal quarter ended December 31, 2025, no director or named executive officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" (in each case, as defined in Item 408 of Regulation S-K). In conformance with updated SEC regulations, the Company has adopted amended insider trading policies and procedures governing the purchase, sale and/or other dispositions of the Company's securities by directors, officers and employees, or the Company itself, that are reasonably designed to promote compliance with insider trading laws, rules and regulations, and New York Stock Exchange standards . Item 9C. Disclosur e Regarding Foreign Jurisdictions that Prevent Inspections. None 83 PART III Item 10. Directors, Executive Off icers and Corporate Governance. The Company has adopted amended insider trading policies and procedures governing the purchase, sale and/or other dispositions of the Company's securities by directors, officers and employees, or the Company itself, that are reasonably designed to promote compliance with insider trading laws, rules and regulations, and New York Stock Exchange standards. Information related to our directors will be set forth under the caption “Proposal 1: Election of Directors” of our Proxy Statement for our Annual Meeting of Stockholders in 2026 (the “2026 Proxy Statement”). Such information is incorporated herein by reference. Information relating to our Executive Officers is included in Part I of this Annual Report under the caption “Executive Officers.” Information relating to compliance with Section 16(a) of the Exchange Act will be set forth under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” of our 2026 Proxy Statement. Such information is incorporated herein by reference. Information related to our code of ethics will be set forth under the caption “Corporate Governance and General Information Concerning the Board of Directors and its Committees” of our 2026 Proxy Statement. Such information is incorporated herein by reference. Information relating to the Audit Committee and Board of Directors determinations concerning whether a member of the Audit Committee is a “financial expert” as that term is defined under Item 407(d)(5) of Regulation S-K will be set forth under the caption “Corporate Governance and General Information Concerning the Board of Directors and its Committees” of our 2026 Proxy Statement. Such information is incorporated herein by reference. Item 11. Executiv e Compensation. Information relating to this item will be set forth under the captions “Compensation Discussion and Analysis,” “Director Compensation,” “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report on Executive Compensation” of our 2026 Proxy Statement. Such information is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Own ers and Management and Related Stockholder Matters. Information relating to the security ownership of certain beneficial owners and management will be included in our 2026 Proxy Statement under the caption “Security Ownership of Certain Beneficial Owners and Management” and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence. Information relating to this item will be set forth under the captions “Certain Relationships and Related Party Transactions” and “Corporate Governance and General Information Concerning the Board of Directors and its Committees” of our 2026 Proxy Statement. Such information is incorporated herein by reference. 84 Item 14. Principal Accoun ting Fees and Services. Information relating to this item will be set forth under the caption “Independent Registered Public Accounting Firm Fees” of our 2026 Proxy Statement. Such information is incorporated herein by reference. 85 PART IV Item 15. Exhibits, Financi al Statement Schedules. (a) List the following documents filed as a part of the report: (1) The Company’s Consolidated Financial Statements at December 31, 2025 and December 31, 2024 and for each of the three years in the period ended December 31, 2025, and the notes thereto, together with the report of the independent auditors on those Consolidated Financial Statements, are hereby filed as part of this report, beginning on page F-1. (2) Valuation & Qualifying Accounts for each of the three years in the period ended December 31, 2025 are hereby filed as part of this report on page F- 61 . (3) See Exhibit Index below. Item 16. Form 10-K Summary None. 86 Exhibit Index Exhibit Number Description 3.1# Amended and Restated Certificate of Incorporation of Parsons Corporation . 3.2# Amended and Restated Bylaws of Parsons Corporation . 3.3# Second Amended and Restated Bylaws of Parsons Corporation. 4.1# Description of Capital Stock of Parsons Corporation. 4.2# Indenture, dated as of August 20, 2020, between Parsons Corporation and U.S. Bank National Association. 4.3# Indenture, Dated as of February 26, 2024, between Parsons Corporation and U.S. Bank Trust Company, National Association. 4.4# Form of 2.625% Convertible Senior Notes due 2029 (included in Exhibit 4.3). 10.1# 2012 Amendment and Restatement of Parsons Employee Stock Ownership Plan (including all amendments to date), currently in effect . 10.2# 2019 Amendment and Restatement of Parsons Employee Stock Ownership Plan . 10.3# First Amendment to the 2019 Amendment and Restatement of Parsons Employee Stock Ownership Plan, effective January 1, 2020 10.4# Second Amendment to the 2019 Amendment and Restatement of Parsons Employee Stock Ownership Plan, effective May 8, 2019. 10.5# Parsons Corporation Employee Stock Ownership Trust Agreement, effective as of December 31, 2005 . 10.6#+ Parsons Corporation Restricted Award Plan . 10.7#+ Form of Restricted Award Units agreement under the Parsons Corporation Restricted Award Plan . 10.8#+ Parsons Corporation Annual Incentive Plan dated January 1, 2020 . 10.9#+ Parsons Corporation Annual Incentive Plan Amended as of October 19, 2020. 10.10#+ Parsons Corporation Annual Incentive Plan Amendment dated January 1, 2021. 10.11#+ Parsons Corporation Shareholder Value Plan . 10.12#+ Parsons Corporation Long Term Growth Plan . 10.13#+ Parsons Corporation Share Value Retirement Plan . 10.14#+ Parsons Corporation Incentive Award Plan . 10.15#+ Form of Restricted Stock Unit Agreement under the Parsons Corporation Incentive Award Plan. 10.16#+ Third Amendment to the 2019 Amendment and Restatement of Parsons Employee Stock Ownership Plan, effective January 1, 2021. 10.17#+ Form of Restricted Stock Unit Agreement under the Parsons Corporation Incentive Award Plan (for Non-Employee Director Awards commencing in 2020). 10.18#+ Form of Restricted Stock Unit Agreement under the Parsons Corporation Incentive Award Plan (for Non-Employee Director Fee Deferral Awards commencing in 2020) . 10.19#+ Form of Restricted Stock Unit Agreement under the Parsons Corporation Incentive Award Plan (for Non-Employee Director Awards in 2019). 10.20#+ Parsons Corporation Non-Employee Director Compensation Policy (as amended effective April 21, 2020). 10.21#+ Fee Deferral Plan for Outside Directors of the Parsons Corporation . 10.22#+ Parsons Corporation Employee Stock Purchase Plan. 10.23#+ Parsons Corporation Prospectus to Employee Stock Purchase Plan dated November 1, 2021. 87 10.26#+ Supplemental Executive Retirement Plan dated January 1, 1997 . 10.27#+ First Amendment to the SERP effective January 1, 2020 . 10.28#+ Change in Control Severance Agreement, dated August 6, 2021, by and between Parsons Corporation and Carey Smith. 10.29#+ Change in Control Severance Agreement, dated August 9, 2021, by and between Parsons Corporation and Charles L. Harrington. 10.30#+ Change in Control Severance Agreement, dated August 6, 2021, by and between Parsons Corporation and George Ball. 10.31#+ Change in Control Severance Agreement, dated August 6, 2021, by and between Parsons Corporation and Michael Kolloway. 10.32#+ Change in Control Severance Agreement, dated August 6, 2021, by and between Parsons Corporation and David Spille. 10.33#+ Change in Control Severance Agreement, dated October 6, 2021, by and between Parsons Corporation and Matthew Ofilos. 10.34#+ Form of Equity Award Amendment Letter Agreement, dated August 10, 2020, by and between Parsons Corporation and George L. Ball . 10.35#+ Form of Equity Award Amendment Letter Agreement, dated August 10, 2020, by and between Parsons Corporation and Charles L. Harrington. 10.36#+ Form of Equity Award Amendment Letter Agreement, dated August 10, 2020, by and between Parsons Corporation and Carey A. Smith . 10.37#+ Form of Equity Award Amendment Letter Agreement, dated August 10, 2020, by and between Parsons Corporation and Michael R. Kolloway. 10.38#+ Form of Equity Award Amendment Letter Agreement, dated August 10, 2020, by and between Parsons Corporation and Debra Fiori. 10.39#+ Form of Performance Stock Unit Award Amendment, dated July 19, 2021, by and between Parsons Corporation and Carey A. Smith. 10.40#+ Form of Restricted Stock Unit Award Amendment, dated July 19, 2021, by and between Parsons Corporation and Carey A. Smith. 10.41#+ Form of Performance Stock Unit Award Amendment, dated July 19, 2021, by and between Parsons Corporation and Charles L. Harrington. 10.42#+ Form of Restricted Stock Unit Award Amendment, dated July 19, 2021, by and between Parsons Corporation and Charles L. Harrington. 10.43#+ Form of Performance Stock Unit Award Amendment, dated July 19, 2021, by and between Parsons Corporation and George Ball. 10.44#+ Form of Restricted Stock Unit Award Amendment, dated July 19, 2021, by and between Parsons Corporation and George Ball. 10.45#+ Form of Performance Stock Unit Award Amendment, dated July 19, 2021, by and between Parsons Corporation and Michael R. Kolloway. 10.46#+ Form of Restricted Stock Unit Award Amendment, dated July 19, 2021, by and between Parsons Corporation and Michael R. Kolloway. 10.47#+ Form of Performance Stock Unit Award Amendment, dated July 19, 2021, by and between Parsons Corporation and David Spille. 10.48#+ Form of Restricted Stock Unit Award Amendment, dated July 19, 2021, by and between Parsons Corporation and David Spille. 88 10.52# Fifth Amended and Restated Credit Agreement, dated as of November 15, 2017, by and among Parsons Corporation, the lenders from time to time party thereto, The Bank of Tokyo-Mitsubishi UFJ, Ltd., as administrative agent, swing line bank and co-lead arranger, Wells Fargo Bank, National Association, as syndication agent, The Bank of Nova Scotia, JPMorgan Chase Bank, N.A., Sumitomo Mitsui Banking Corporation and U.S. Bank National Association, as documentation agents, and Wells Fargo Securities, LLC, as co-lead arranger . 10.53# First Amendment to the Fifth Amended and Restated Credit Agreement, dated as of January 4, 2019, by and among Parsons Corporation, the Banks party thereto and MUFG Bank Ltd, as administrative agent . 10.54# Credit Agreement dated June 25, 2021, among Parsons Corporation, the Guarantors, the Lenders, and Bank of America, N.A., as Administrative Agent, Swingline Lender, and an L/C Issuer. 10.55# Term Loan Agreement, dated as of January 4, 2019, among Parsons Corporation, MUFG Union Bank, N.A., as administrative agent, The Bank of Nova Scotia, as syndication agent, the other financial institutions party thereto and MUFG Union Bank, N.A. and The Bank of Nova Scotia, as co-lead arrangers . 10.56# Form of Employee Stockownership Trust Agreement, dated as of June 8, 2020, by and between Parsons Corporation and Newport Trust Company. 10.57# Form of Registration Rights Agreement by and between Parsons Corporation and Newport Trust Company. 10.58# Form of Fifth Amendment to the Parsons Corporation Retirement Savings Plan. 10.59#+ Form of Fourth Amendment to the 2019 Amendment and Restatement of Parsons Employee Stock Ownership Plan, effective March 1, 2021. 10.60#+ Fourth Amendment to the Parsons Employee Stock Ownership Plan 2019 Amendment and Restatement, effective March 1, 2021. 10.61#+ Form of Indemnification Agreement between Parsons Corporation and certain of its directors and officers . 10.62#+ Form of Transition Agreement, dated February 2022, by and between Parsons Corporation and Charles L. Harrington. 10.63# Delayed Draw Term Loan Agreement and Form of First Amendment to Credit Agreement. 10.65#+ Seventh Amendment to The Parsons Corporation Retirement Savings Plan (2017 Amendment and Restatement). 10.66#+ Fifth Amendment to The Parsons Employee Stock Ownership Plan 2019 Amendment and Restatement. 10.67#+ Sixth Amendment to The Parsons Employee Stock Ownership Plan 2019 Amendment and Restatement. 10.68# Form of Confirmations of Base and Additional Call Option Transactions, between Parsons Corporation and Option Counterparties. 10.69#+ Tenth Amendment To The Parsons Corporation Retirement Savings Plan (2017 Amendment and Restatement). 10.70#+ Seventh Amendment To The Parsons Employee Stock Ownership Plan 2019 Amendment and Restatement. 10.71#+ Eleventh Amendment To The Parsons Corporation Retirement Savings Plan (2017 Amendment and Restatement) 10.72*+ Twelfth Amendment To The Parsons Corporation Retirement Savings Plan (2017 Amendment and Restatement) 10.73*+ Thirteenth Amendment To The Parsons Corporation Retirement Savings Plan (2017 Amendment and Restatement) 10.74*+ Fourteenth Amendment To The Parsons Corporation Retirement Savings Plan (2017 Amendment and Restatement) 89 10.75*+ Fifteenth Amendment To The Parsons Corporation Retirement Savings Plan (2017 Amendment and Restatement) 10.76*+ Sixteenth Amendment To The Parsons Corporation Retirement Savings Plan (2017 Amendment and Restatement) 19.3# Parsons Corporation Insider Trading Compliance Policy 21.1* List of Subsidiaries of the Registrant 23.1* Consent of PricewaterhouseCoopers LLP. 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. 97.1# Parsons Corporation Executive Compensation Clawback Policy 97.2# Parsons Corporation Dodd-Frank Compliant Compensation Clawback Policy 101* The following financial statements from the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, formatted in Inline XBRL Taxonomy Extension Schema With Embedded Linkbases Document: (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. 104* Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101). * Filed herewith . # Previously filed. + Indicates a management contract or compensatory plan or arrangement. 90 SIGNA TURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized . Parsons Corporation Date: February 11, 2026 By: /s/ Carey A. Smith Carey A. Smith Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Name Title Date /s/ Carey A. Smith Chief Executive Officer and Director February 11, 2026 Carey A. Smith (Principal Executive Officer) /s/ Matthew M. Ofilos Chief Financial Officer February 11, 2026 Matthew M. Ofilos (Principal Financial and Accounting Officer) /s/ George L. Ball Director February 11, 2026 George L. Ball /s/ Mark K. Holdsworth Director February 11, 2026 Mark K. Holdsworth /s/ Steven F. Leer Director February 11, 2026 Steven F. Leer /s/ Letitia A. Long Director February 11, 2026 Letitia A. Long /s/ Ellen M. Lord Director February 11, 2026 Ellen M. Lord /s/ Darren W. McDew Director February 11, 2026 Darren W. McDew /s/ Harry T. McMahon Director February 11, 2026 Harry T. McMahon /s/ M. Christian Mitchell Director February 11, 2026 M. Christian Mitchell /s/ Robert H. Smith Director February 11, 2026 Robert H. Smith /s/ Suzanne M. Vautrinot Director February 11, 2026 Suzanne M. Vautrinot /s/ David C. Wajsgras Director February 11, 2026 David C. Wajsgras 91 INDEX TO CONSOLID ATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) F- 2 Consolidated Balance Sheets as of December 31, 2025 and December 31, 2024 F- 5 Consolidated Statements of Income for the Years ended December 31, 2025, December 31, 2024 and December 31, 2023 F- 6 Consolidated Statements of Comprehensive Income for the Years ended December 31, 2025, December 31, 2024 and December 31, 2023 F- 7 Consolidated Statements of Changes in Shareholders’ Equity for the Years ended December 31, 2025, December 31, 2024 and December 31, 2023 F- 8 Consolidated Statements of Cash Flows for the Years ended December 31, 2025, December 31, 2024 and December 31, 2023 F- 10 Notes to Consolidated Financial Statements F- 11 F- 1 Re port of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Parsons Corporation Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Parsons Corporation and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of income, of comprehensive income, of changes in shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2025 appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in I nternal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. As described in Management’s Annual Report on Internal Control over Financial Reporting, management has excluded TRS Group, Inc. ("TRS"), Chesapeake Technology International, Corp ("CTI"), and Applied Sciences Consulting, Inc. ("ASC") from its assessment of internal control over financial reporting as of December 31, 2025 because they were acquired by the Company in purchase business combinations F- 2 during 2025. We have also excluded TRS, CTI and ASC from our audit of internal control over financial reporting. TRS, CTI and ASC are wholly-owned subsidiaries whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting collectively represent approximately 0.8% and 1.1%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2025. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition – Determination of Estimated Contract Cost and Variable Consideration Related to Estimated Claims Revenue for Fixed-Price Contracts Recognized Over Time As described in Notes 2 and 4 to the consolidated financial statements, revenue is derived from long-term contracts with customers whereby the Company provides planning, design, engineering, technical, and construction and program management services. The Company enters into cost-plus, time-and-materials, and fixed-price contracts with its customers. Fixed-price contract revenue recognized was $2.1 billion for the year ended December 31, 2025, which accounts for approximately 34% of the Company’s consolidated revenue. Fixed-price contract revenue is recognized over time using an input measure (i.e., costs incurred to date relative to total estimated costs at completion) to measure progress. Under the cost-to-cost measure of progress method, the extent of progress towards completion is measured based on the ratio of total costs incurred-to-date to the total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. Management includes variable consideration, such as claims revenue, in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. Contract costs consist of direct costs on contracts, including labor and materials, amounts payable to subcontractors, direct overhead costs and equipment expense (primarily depreciation, fuel, maintenance and repairs). Changes to estimated contract costs, either due to unexpected events or revisions to management’s initial estimates, for a given project are recognized in the period in which they are determined. Recognition of profit on long-term contracts requires the use of assumptions and estimates related to total contract revenue and in particular estimated claims revenue, total estimated cost at F- 3 completion, and the measurement of progress towards completion. Management’s estimates are continually evaluated as work progresses and are revised when necessary. The principal considerations for our determination that performing procedures relating to revenue recognition, specifically the determination of estimated contract cost and variable consideration related to estimated claims revenue for fixed-price contracts recognized over time is a critical audit matter are (i) the significant judgment by management in determining the estimated contract cost and variable consideration related to estimated claims revenue for fixed-price contracts recognized over time; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence for the estimated contract cost and variable consideration related to estimated claims revenue for fixed-price contracts recognized over time. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the determination of estimated contract cost and variable consideration related to estimated claims revenue for fixed-price contracts recognized over time. These procedures also included, among others, for a selection of fixed-price contracts (i) evaluating and testing management’s process for determining the estimated contract cost and variable consideration related to estimated claims revenue, which included reading contracts and other documents related to the estimates, and testing of underlying incurred and estimated contract costs; (ii) assessing management’s ability to reasonably estimate total contract costs by performing a comparison of the actual estimated contract cost as compared with prior period estimates, including evaluating the timely identification of circumstances that may warrant a modification to the estimated contract cost; and (iii) evaluating estimated claims revenue by inquiry with external legal counsel regarding the underlying claim and agreeing estimated claims revenue to documents related to those estimates. /s/ PricewaterhouseCoopers LLP Los Angeles, California February 11, 2026 We have served as the Company’s auditor since at least 1969. We have not been able to determine the specific year we began serving as auditor of the Company. F- 4 Parsons Corporation and Subsidiaries Consolidated B alance Sheets (in thousands, except shares and par value) December 31, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents (including $ 153,144 and $ 202,121 Cash of consolidated joint ventures) $ 466,388 $ 453,548 Accounts receivable, net (including $ 337,270 and $ 294,700 Accounts receivable of consolidated joint ventures) 1,124,417 1,100,396 Contract assets (including $ 41,318 and $ 7,906 Contract assets of consolidated joint ventures) 915,806 741,504 Prepaid expenses and other current assets (including $ 11,145 and $ 14,723 Prepaid expenses and other current assets of consolidated joint ventures) 176,932 166,952 Total current assets 2,683,543 2,462,400 Property and Equipment, net (including $ 2,488 and $ 2,971 Property and equipment of consolidated joint ventures) 151,061 111,575 Right of use assets, operating leases (including $ 4,482 and $ 5,726 Right of use assets, operating leases of consolidated joint ventures) 126,770 153,048 Goodwill 2,186,650 2,082,680 Investments in and advances to unconsolidated joint ventures 148,640 138,759 Intangible assets, net 325,880 349,937 Deferred tax assets 88,191 133,450 Other noncurrent assets 58,799 56,113 Total assets $ 5,769,534 $ 5,487,962 Liabilities and Shareholders' Equity Current liabilities: Accounts payable (including $ 58,914 and $ 28,214 Accounts payable of consolidated joint ventures) $ 250,514 $ 207,589 Accrued expenses and other current liabilities (including $ 195,747 and $ 198,797 Accrued expenses and other current liabilities of consolidated joint ventures) 884,445 894,425 Contract liabilities (including $ 44,802 and $ 66,144 Contract liabilities of consolidated joint ventures) 340,113 289,799 Short-term lease liabilities, operating leases (including $ 2,395 and $ 3,522 Short-term lease liabilities, operating leases of consolidated joint ventures) 45,353 52,725 Income taxes payable 11,239 7,701 Short Term debt - 463,405 Total current liabilities 1,531,664 1,915,644 Long-term employee incentives 30,834 31,818 Long-term debt 1,237,816 784,096 Long-term lease liabilities, operating leases (including $ 2,083 and $ 2,203 Long-term lease liabilities, operating leases of consolidated joint ventures) 94,044 114,386 Deferred tax liabilities 12,159 11,043 Other long-term liabilities 95,345 96,486 Total liabilities $ 3,001,862 $ 2,953,473 Contingencies (Note 14) Shareholders' equity: Common stock, $ 1 par value; authorized 1,000,000,000 shares; 145,676,335 and 146,656,225 shares issued; 56,103,965 and 52,657,447 public shares outstanding; 50,864,117 and 54,117,904 ESOP shares outstanding $ 145,676 $ 146,655 Treasury stock, 38,708,253 shares at cost ( 792,638 ) ( 815,282 ) Additional paid-in capital 2,648,730 2,684,829 Retained earnings 661,173 426,781 Accumulated other comprehensive loss ( 20,921 ) ( 26,594 ) Total Parsons Corporation shareholders' equity 2,642,020 2,416,389 Noncontrolling interests 125,652 118,100 Total shareholders' equity 2,767,672 2,534,489 Total liabilities and shareholders' equity $ 5,769,534 $ 5,487,962 The accompanying notes are an integral part of these consolidated financial statements. r F- 5 Parsons Corporation and Subsidiaries Consolidated Stat ements of Income Years Ended December 31, 2025, December 31, 2024 and December 31, 2023 (in thousands, except for per share data) 2025 2024 2023 Revenue $ 6,364,245 $ 6,750,576 $ 5,442,749 Direct cost of contracts 4,932,711 5,344,154 4,236,735 Equity in earnings (losses) of unconsolidated joint ventures 2,583 ( 23,361 ) ( 47,751 ) Selling, general and administrative expenses 1,016,043 954,995 869,905 Operating income 418,074 428,066 288,358 Interest income 6,879 11,428 2,191 Interest expense ( 51,303 ) ( 51,582 ) ( 31,497 ) Convertible debt repurchase loss - ( 18,355 ) - Other income (expense), net 8,861 ( 1,906 ) 5,001 Total other expense ( 35,563 ) ( 60,415 ) ( 24,305 ) Income before income tax expense 382,511 367,651 264,053 Income tax expense ( 73,647 ) ( 76,986 ) ( 56,138 ) Net income including noncontrolling interests 308,864 290,665 207,915 Net income attributable to noncontrolling interests ( 67,725 ) ( 55,612 ) ( 46,766 ) Net income attributable to Parsons Corporation $ 241,139 $ 235,053 $ 161,149 Earnings per share: Basic $ 2.26 $ 2.21 $ 1.53 Diluted $ 2.20 $ 2.12 $ 1.42 The accompanying notes are an integral part of these consolidated financial statements. F- 6 Parsons Corporation and Subsidiaries Consolidated Statements of Comprehensive Income Years Ended December 31, 2025, December 31, 2024 and December 31, 2023 (in thousands) 2025 2024 2023 Net income including noncontrolling interests $ 308,864 $ 290,665 $ 207,915 Other comprehensive income, net of tax Foreign currency translation adjustment, net of tax 6,884 ( 11,546 ) 2,375 Pension adjustments, net of tax ( 1,205 ) ( 131 ) 568 Comprehensive income including noncontrolling interests, net of tax 314,543 278,988 210,858 Comprehensive income attributable to noncontrolling interests, net of tax ( 67,725 ) ( 55,621 ) ( 46,768 ) Comprehensive income attributable to Parsons Corporation, net of tax $ 246,818 $ 223,367 $ 164,090 The accompanying notes are an integral part of these consolidated financial statements. F- 7 Parsons Corporation and Subsidiaries Consolidated Statements of Changes i n Shareholders’ Equity Years Ended December 31, 2025, December 31, 2024 and December 31, 2023 (in thousands) Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Parsons Equity Noncontrolling Interests Total Balances at December 31, 2022 $ 146,132 $ ( 844,936 ) $ 2,717,134 $ 43,089 $ ( 17,849 ) $ 2,043,570 $ 52,365 $ 2,095,935 Comprehensive income Net income — — — 161,149 — 161,149 46,766 207,915 Foreign currency translation loss, net — — — — 2,373 2,373 2 2,375 Pension adjustments, net — — — — 568 568 — 568 Contributions of treasury stock to ESOP — 17,625 39,804 — — 57,429 — 57,429 Contributions — — — — — - 2,867 2,867 Distributions — — — — — - ( 12,496 ) ( 12,496 ) Issuance of equity securities, net of retirement 442 — ( 1,171 ) ( 514 ) — ( 1,243 ) — ( 1,243 ) Repurchase of common stock ( 233 ) — ( 10,767 ) — — ( 11,000 ) — ( 11,000 ) Stock-based compensation — — 34,365 — — 34,365 — 34,365 Balances at December 31, 2023 $ 146,341 $ ( 827,311 ) $ 2,779,365 $ 203,724 $ ( 14,908 ) $ 2,287,211 $ 89,504 $ 2,376,715 Comprehensive income Net income — — — 235,053 — 235,053 55,612 290,665 Foreign currency translation gain, net — — — — ( 11,555 ) ( 11,555 ) 9 ( 11,546 ) Pension adjustments, net — — — — ( 131 ) ( 131 ) — ( 131 ) Contributions of treasury stock to ESOP — 12,029 46,199 — — 58,228 — 58,228 Contributions — — — — — — 2,174 2,174 Distributions — — — — — — ( 29,199 ) ( 29,199 ) Capped call transactions — — ( 66,121 ) — — ( 66,121 ) — ( 66,121 ) Repurchase of warrants — — ( 104,952 ) — — ( 104,952 ) — ( 104,952 ) Bond hedge termination — — 149,308 — — 149,308 — 149,308 Convertible debt inducement — — ( 147,105 ) — — ( 147,105 ) — ( 147,105 ) Issuance of equity securities, net of retirement 601 — ( 3,235 ) ( 11,996 ) — ( 14,630 ) — ( 14,630 ) Repurchases of common stock ( 287 ) — ( 24,712 ) — — ( 24,999 ) — ( 24,999 ) Stock-based compensation — — 56,082 — — 56,082 — 56,082 Balances at December 31, 2024 $ 146,655 $ ( 815,282 ) $ 2,684,829 $ 426,781 $ ( 26,594 ) $ 2,416,389 $ 118,100 $ 2,534,489 The accompanying notes are an integral part of these consolidated financial statements. F- 8 Parsons Corporation and Subsidiaries Consolidated Statements of Changes in Shareholders’ Equity Years Ended December 31, 2025, December 31, 2024 and December 31, 2023 (continued) (in thousands) Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Parsons Equity Noncontrolling Interests Total Comprehensive income Net income — — — 241,139 — 241,139 67,725 308,864 Foreign currency translation gain, net — — — — 6,878 6,878 6 6,884 Pension adjustments, net — — — — ( 1,205 ) ( 1,205 ) — ( 1,205 ) Contributions of treasury stock to ESOP — 22,644 49,456 — — 72,100 — 72,100 Contributions — — — — — — 3,094 3,094 Distributions — — — — — — ( 63,273 ) ( 63,273 ) Repurchase of warrants 62 — ( 62 ) — — — — — Issuance of equity securities, net of retirement 781 — ( 5,529 ) ( 6,747 ) — ( 11,495 ) — ( 11,495 ) Repurchases of common stock ( 1,822 ) — ( 123,171 ) — — ( 124,993 ) — ( 124,993 ) Stock-based compensation — — 43,207 — — 43,207 — 43,207 Balances at December 31, 2025 $ 145,676 $ ( 792,638 ) $ 2,648,730 $ 661,173 $ ( 20,921 ) $ 2,642,020 $ 125,652 $ 2,767,672 F- 9 Parsons Corporation and Subsidiaries Consolidated Statem ents of Cash Flows Years Ended December 31, 2025, December 31, 2024 and December 31, 2023 (in thousands) 2025 2024 2023 Cash flows from operating activities Net income including noncontrolling interests $ 308,864 $ 290,665 $ 207,915 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 116,486 99,251 119,973 Amortization of debt issue costs 5,057 7,799 2,842 Loss (gain) on disposal of property and equipment 639 948 206 Convertible debt repurchase loss — 18,355 — Provision for doubtful accounts — — 32 Deferred taxes 44,312 6,101 ( 8,914 ) Foreign currency transaction gains and losses ( 5,506 ) 6,919 ( 330 ) Equity in losses (earnings) of unconsolidated joint ventures ( 2,583 ) 23,361 47,751 Return on investments in unconsolidated joint ventures 41,230 40,162 48,970 Stock-based compensation 43,207 56,082 34,365 Contributions of treasury stock 73,655 59,778 58,172 Changes in assets and liabilities, net of acquisitions and newly consolidated joint ventures Accounts receivable 10,933 ( 163,139 ) ( 176,181 ) Contract assets ( 163,070 ) 31,881 ( 119,898 ) Prepaid expenses and other assets ( 16,151 ) 35,830 ( 95,415 ) Accounts payable 23,338 ( 42,686 ) 24,497 Accrued expenses and other current liabilities ( 30,255 ) 79,984 163,440 Contract liabilities 34,896 ( 11,325 ) 84,439 Income taxes 3,575 ( 341 ) 2,886 Other long-term liabilities ( 10,245 ) ( 16,019 ) 12,949 Net cash provided by operating activities 478,382 523,606 407,699 Cash flows from investing activities Capital expenditures ( 67,970 ) ( 49,213 ) ( 40,396 ) Proceeds from sale of property and equipment 842 179 546 Payments for acquisitions, net of cash acquired ( 145,079 ) ( 428,710 ) ( 221,937 ) Investments in unconsolidated joint ventures ( 83,599 ) ( 133,921 ) ( 119,582 ) Return of investments in unconsolidated joint ventures 40,222 54,950 5,018 Proceeds from sales of investments in unconsolidated joint ventures — — 381 Net cash used in investing activities ( 255,584 ) ( 556,715 ) ( 375,970 ) Cash flows from financing activities Proceeds from borrowings under credit agreement 243,700 153,200 620,900 Repayments of borrowings under credit agreement ( 243,700 ) ( 153,200 ) ( 620,900 ) Proceeds from issuance of convertible notes due 2029 — 800,000 — Repurchases of convertible notes due 2025 ( 113,405 ) ( 497,613 ) — Proceeds from term loan 450,000 Repayment of delayed draw term loan ( 350,000 ) Payments for debt issuance costs ( 2,571 ) ( 19,185 ) — Contributions by noncontrolling interests 1,580 2,174 2,867 Distributions to noncontrolling interests ( 63,275 ) ( 29,199 ) ( 12,496 ) Repurchases of common stock ( 124,994 ) ( 25,000 ) ( 11,000 ) Taxes paid on vested stock ( 20,315 ) ( 22,560 ) ( 7,301 ) Capped call transactions — ( 88,400 ) — Bond hedge termination — 195,549 — Redemption of warrants — ( 104,952 ) — Proceeds from issuance of common stock 8,880 7,935 6,059 Net cash provided by (used in) financing activities ( 214,100 ) 218,749 ( 21,871 ) Effect of exchange rate changes 4,142 ( 5,035 ) 546 Net increase (decrease) in cash, cash equivalents and restricted cash 12,840 180,605 10,404 Cash, cash equivalents and restricted cash Beginning of year 453,548 272,943 262,539 End of year $ 466,388 $ 453,548 $ 272,943 Cash paid during the year for Interest $ 43,810 $ 34,440 $ 30,273 The accompanying notes are an integral part of these consolidated financial statements. F- 10 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 1. Description of Operations Organization Parsons Corporation, a Delaware corporation, and its subsidiaries (collectively, the “Company”) provide sophisticated design, engineering and technical services, and smart and agile software to the United States federal government and Critical Infrastructure customers worldwide. The Company performs work in various foreign countries through local subsidiaries, joint ventures and foreign offices maintained to carry out specific projects. 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of Parsons Corporation and its subsidiaries and affiliates which it controls. Interests in joint ventures that are controlled by the Company, or for which the Company is otherwise deemed to be the primary beneficiary, are consolidated. For joint ventures in which the Company does not have a controlling interest, but exerts significant influence, the Company applies the equity method of accounting. Intercompany accounts and transactions are eliminated in consolidation. Certain amounts may not foot due to rounding. Use of Estimates The preparation of the consolidated financial statements in accordance with U.S. 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; useful lives of property and equipment and intangible assets; valuation of deferred income tax assets and uncertain tax positions, among others. ESOP The Company maintains a non-leveraged ESOP for eligible employees, for which the Company contributes shares of its own stock to the ESOP trust each year. Throughout the year, as employee services are rendered, the Company records compensation expense based on salaries of eligible employees. At each reporting period, the shares held within the ESOP or committed to be contributed to the ESOP are adjusted to their redemption value through an offsetting charge or credit to retained earnings. Treasury Stock The Company records treasury stock purchases under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock. The Company records the reissuance of treasury stock using the first-in, first-out method of accounting. Contributions of 1,172,622 shares, 633,033 shares, and 915,113 shares of common stock were made to the ESOP in 2025, 2024 and 2023, respectively. F- 11 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 Share Repurchases On August 9, 2021, the Company’s Board of Directors authorized the Company to acquire a number of shares of Common Stock having an aggregate market value of not greater than $ 100 million from time to time, commencing on August 12, 2021. The Board further amended this authorization in August 2022 to remove the prior expiration date and grant executive leadership the discretion to determine the price for such share repurchases. The Board further amended this authorization in March 2025 to increase and reset the repurchase capacity to $ 250 million. Any purchases made by the Company during Q1 of 2025 were deducted from the reset capacity. Under prior authorizations, the Company had repurchased shares with an aggregate market value of $ 79.7 million. The aggregate market value of shares of Common Stock the Company is authorized to acquire from prior authorizations and the March 2025 authorization is not greater than $ 329.7 million. Repurchased shares of common stock are retired and included in “Repurchases of common stock” in cash flows from financing activities in the Consolidated Statements of Cash Flows. Earnings per Share Basic earnings per common share (“EPS”) is calculated by dividing Net income by the weighted average number of common shares outstanding during the year. Diluted earnings per common share is calculated using the if-converted method by dividing adjusted net income by adjusted weighted average outstanding shares, assuming conversion of all potentially dilutive securities. Upon contribution to the ESOP, the shares become outstanding and are included within the earnings per share computations. Revenue Recognition In accordance with Account Standard Update ("ASC") 606 - Revenue From Contracts With Customers , the Company follows the five-step process in ASC 606 to recognize revenue: 1. Identify the contract 2. Identify performance obligations 3. Determine the transaction price 4. Allocate the transaction price 5. Recognize revenue Contracts —Revenue is derived from long-term contracts with customers whereby the Company provides planning, design, engineering, technical, and construction and program management services. The Company has contracts with the United States federal government that contain provisions requiring compliance with the United States Federal Acquisition Regulation (“FAR”) and the United States Cost Accounting Standards (“CAS”). These regulations are generally applicable to all of the Company’s federal government contracts and are partially or fully incorporated in some local and state agency contracts. Most of the Company’s federal government contracts are subject to termination at the convenience of the client. These contracts typically provide for reimbursement of costs incurred and payment of fees earned through the date of such termination. The Company enters into the following types of contracts with its customers: Cost-Plus—Under cost-plus contracts, the Company is reimbursed for allowable or otherwise defined costs incurred, plus a fee. The contracts may also include incentives for various performance criteria, including quality, timeliness, safety and cost-effectiveness. In addition, costs are generally subject to review by clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract. F- 12 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 Time-and-Materials—Under time-and-materials contracts, hourly billing rates are negotiated and charged to clients based on the actual time spent on a project. In certain cases, these contracts may be subject to maximum contract values. In addition, clients reimburse actual out-of-pocket costs for materials and other direct incidental expenditures that are incurred in connection with the performance under the contract. Fixed-Price—The Company enters into two types of fixed-price contracts: firm fixed-price (“FFP”) and fixed-price per unit (“FPPU”). Under FFP contracts, clients pay an agreed fixed-amount negotiated in advance for a specified scope of work. Contract Costs —Contract costs consist of direct costs on contracts, including labor and materials, amounts payable to subcontractors, direct overhead costs and equipment expense (primarily depreciation, fuel, maintenance and repairs). All contract costs are recorded as incurred. Changes to estimated contract costs, either due to unexpected events or revisions to management’s initial estimates, for a given project are recognized in the period in which they are determined. Pre-contract costs are expensed as incurred unless they are expected to be recovered from the client, generate or enhance resources that will be used in satisfying performance obligations in the future and directly relate to an existing or anticipated contract. Costs to mobilize equipment and labor to a job site, prior to substantive work beginning (“mobilization costs”) are capitalized as incurred and amortized over the expected duration of the contract. Additionally, the Company may incur incremental costs to obtain certain contracts, such as selling and market costs, bid and proposal costs, sales commissions, and legal fees, certain of which can be capitalized if they are recoverable under the contract. Capitalized contract costs are included in other current assets on the consolidated balance sheets and were not material as of December 31, 2025 and December 31, 2024. Performance Obligations —A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. To the extent a contract is deemed to have multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. The Company determines the relative standalone selling price utilizing observable prices for the sale of the underlying goods or services. Contracts are considered to have a single performance obligation if the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts or is not distinct in the context of the contract, which is mainly because the Company provides a significant service of integrating a complex set of tasks and components into a single project or capability. Engineering and construction contracts are generally accounted for as a single performance obligation while our engineering and construction supervision contracts are accounted for as two separate performance obligations. When providing construction supervision services, the Company is not liable for the construction of the asset, but has an overall responsibility to oversee, coordinate, measure, and evaluate the quality of construction work and the performance of the construction contractor on behalf of the customer. Customers are generally billed as the Company satisfies its performance obligations and payment terms typically range from 30 to 120 days from the invoice date. Billings under certain fixed-price contracts may be based upon the achievement of specified milestones, while some arrangements may require advance customer payment. The Company’s contracts generally do not include a significant financing component. Variable Consideration —The transaction price for the Company’s contracts may include variable consideration, which includes increases to transaction price for approved and unpriced change orders, claims and incentives, and reductions to transaction price for liquidated damages. Change orders, claims and incentives are generally not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as a modification of the existing contract and performance obligation. The Company estimates variable consideration for a performance obligation utilizing one of the two prescribed methods, depending on which method better predicts the amount of consideration to which the Company will be entitled (or the amount the Company expects to F- 13 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 incur in the case of liquidated damages). Such methods are: (a) the expected value method, whereby the amount of variable consideration to be recognized represents the sum of probability weighted amounts in a range of possible consideration amounts, and (b) the most likely amount method, whereby the amount of variable consideration to be recognized represents the single most likely amount in a range of possible consideration amounts. When applying these methods, the Company considers all information that is reasonably available, including historical, current and estimates of future performance. The expected value method is utilized in situations where a contract contains a large number of possible outcomes, while the most likely amount method is utilized in situations where a contract has only two possible outcomes. The Company includes variable consideration in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. The Company’s estimates of variable consideration and determination of whether to include estimated amounts in transaction price are based largely on an assessment of anticipated performance and all information (historical, current and forecasted) that is reasonably available. The effect of variable consideration on the transaction price of a performance obligation is recognized as an adjustment to revenue on a cumulative catch-up basis. Change Orders —Change orders, which are a normal and recurring part of business, may include changes in specifications or design, manner of performance, facilities, equipment, materials, sites and period of completion of the work. The Company or customer may initiate change orders. Most change orders are not distinct from the existing contract and are accounted for as part of that existing contract. The effect of a change order on the transaction price and measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenues (either as an increase in or a reduction of revenues) on a cumulative catch-up basis. Revenues from unpriced change orders are recognized to the extent of the amounts the Company expects to recover, consistent with the variable consideration policy discussed above. If it is probable that a reversal of revenues will occur, the costs attributable to change orders are treated as contract costs without incremental revenues. To the extent change orders included in the price are not resolved in the Company’s favor, there could be reductions in, or reversals of previously reported amounts of, revenues and profits, and charges against current earnings, which could be material. Claims Revenue —Claims revenue are amounts in excess of agreed contract prices that the Company seeks to collect from clients or others for customer-caused delays, errors in specifications and designs, contract terminations, change orders that are in dispute, or other causes of unanticipated additional contract costs, including factors outside of our control, and therefore the Company believes it is entitled to additional compensation. Claims revenue, when recorded, is only recorded to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur. The Company includes certain claims in the transaction price when the claims are legally enforceable, the Company considers collection to be probable and believes it can reliably estimate the ultimate value. The Company continues to engage in negotiations with its customers on outstanding claims. However, these claims may be resolved at amounts that differ from current estimates, which could result in increases or decreases in future estimated contract profits or losses. Warranties —In most cases, contracts include assurance-type warranties that the Company’s performance is free from material defect and consistent with the specifications of the Company’s contracts, which do not give rise to a separate performance obligation. To the extent the warranty terms provide the customer with an additional service, such as extended maintenance services, such warranty is accounted for as a separate performance obligation. Revenue recognized over time —The Company’s performance obligations are generally satisfied over time as work progresses because of continuous transfer of control to the customer and the Company has the right to bill the customer as costs are incurred. Typically, revenue is recognized over time using an input measure (i.e. costs incurred to date relative to total estimated costs at completion) to measure progress. The Company generally uses the cost-to-cost measure of progress method because it best F- 14 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 depicts the transfer of control to the customer which occurs as the Company incurs costs on its contracts. Under the cost-to-cost measure of progress method, the extent of progress towards completion is measured based on the ratio of total costs incurred to-date to the total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. Any expected losses on construction-type contracts in progress are charged to earnings, in total, in the period the losses are identified. The Company recognizes adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance is recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, the Company recognizes the total loss in the period it is identified. Right to invoice practical expedient —For performance obligations satisfied over time where the Company has a right to consideration from a customer in an amount that corresponds directly with the value of the Company’s performance to-date, the Company recognizes revenue in the amount to which it has a right to invoice. For the Company’s reimbursable services contracts, revenue is recognized using the right to invoice practical expedient, or on a cost-to-cost measure of progress method. The Company will select the method that best represents progress on a project. Revenue recognized at a point in time —For performance obligations satisfied at a point in time, revenue is recognized when the services are performed, control is transferred, and the performance obligation is complete. The Company recognizes revenue at a point in time for vehicle inspection services. Revenue related to the inspection service is recognized for each vehicle inspection at the point the Company has completed the inspection. In the Company’s industry, recognition of profit on long-term contracts requires the use of assumptions and estimates related to total contract revenue and in particular estimated claims revenue, total estimated cost at completion, and the measurement of progress towards completion. Estimates are continually evaluated as work progresses and are revised when necessary. When a change in estimate is determined to have an impact on contract profit, the Company records a positive or negative adjustment to the consolidated statements of income. Cash Equivalents The Company considers all highly liquid investments with original maturities of less than three months to be cash equivalents. Cash equivalent investments are carried at cost, which approximates fair value, and consist primarily of United States Treasuries, time deposits, and other forms of short-term fixed income investments. Restricted Cash and Investments Restricted cash and investments held in trust accounts represent collateral for certain incentive programs. Accounts Receivable, Net Accounts receivable includes billed and unbilled amounts and are recognized in the period when the Company’s rights to receive consideration are unconditional. The Company establishes an allowance for doubtful accounts 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. Past due receivable balances are written off when internal collection efforts have been unsuccessful in collecting the amounts due. F- 15 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 Contract Assets and Contract Liabilities Projects with performance obligations recognized over time that have revenue recognized to-date in excess of cumulative billings and unbilled accounts receivable are reported on our consolidated balance sheets as “Contract assets”. Contract retentions, included in contract assets, represent amounts withheld by clients, in accordance with underlying contract terms, until certain conditions are met or the project is completed. The operating cycle for certain long-term contracts may extend beyond one year, and, accordingly, collection of retainage on those contracts may extend beyond one year. Contract assets are reclassified to accounts receivable when the right to consideration becomes unconditional. Contract liabilities on uncompleted contracts represent the excess of cash collected from clients and billings to clients on contracts in advance of work performed over the amount of revenue recognized and provisions for losses. The majority of these amounts are expected to be earned within 12 months and are classified as current liabilities. Concentration of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivables. The Company’s cash is primarily held with major banks and financial institutions throughout the world. At times, cash balances may be in excess of the amount insured. The Company is involved in a significant volume of contracts with the United States federal government and state and local governments. Approximately 51 % , 59 % , and 55 % of consolidated revenues for the years ended December 31, 2025, December 31, 2024 and December 31, 2023, respectively, and approximately 19 % and 23 % of accounts receivable as of December 31, 2025 and December 31, 2024, respectively were derived from contracts with the United States federal government. No other customers represented 10% or more of consolidated revenues or accounts receivable in any of the periods presented. One customer set within the United States federal government represents over 20% of total Company revenue for the year ended December 31, 2025. In order to mitigate the credit risk associated with customers, the Company performs periodic credit evaluations of its customers’ financial condition. Property and Equipment Property and equipment are stated at cost and are shown net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Depreciation of leasehold improvements is computed using the straight-line method over the shorter of their estimated useful lives or the remaining term of the lease. The cost of assets retired or otherwise disposed of and the related accumulated depreciation are eliminated from the accounts, and any gain or loss thereon is included in net income. Expenditures for maintenance and repairs are expensed as incurred. Property and equipment are reviewed for impairment when events or circumstances change that indicate they may not be recoverable. Impairment losses are recognized when estimated future cash flows expected to result from the use of the assets and their eventual disposition are less than their carrying amount, in which case the asset is written down to its fair value. Leases 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. F- 16 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 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 where the lease consideration is allocated between the components based on relative standalone prices. For real property leases, allocations of lease consideration between lease and non-lease components are immaterial. 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. Equity-Based Compensation The Company measures the value of services received from employees and directors in exchange for an equity-based award based on the grant date fair value. The Company issues equity-based awards that settle in shares of the Company’s common stock. Awards containing performance measures are adjusted at each reporting period for the number of shares expected to be earned. Compensation cost for performance awards are trued-up at each reporting period for the number of shares expected to be earned pro-rated for the portion of the requisite service period rendered. The Company recognizes compensation costs for these awards on either a straight-line or accelerated basis over the vesting period of the award in selling, general and administrative expense in the consolidated statements of income. For awards that include market conditions, the grant date fair value is determined using a Monte Carlo simulation. Business Combinations The Company accounts for business combinations using the acquisition method, under which the purchase price of an acquired company is allocated to the tangible and intangible assets acquired and the liabilities assumed on the basis of their fair values at the date of acquisition. Any excess of purchase price over the fair value of tangible and intangible assets acquired and liabilities assumed is allocated to goodwill. The determination of fair values of assets acquired and liabilities assumed requires the Company to make estimates and use valuation techniques when a market value is not readily available. In determining the fair value of acquired intangible assets from our business acquisitions, the Company uses the multi-period excess earnings method to value customer relationships and backlog and values developed technologies using the relief-from royalty method. The Company’s determination of the fair value of the intangible assets acquired involves the use of significant estimates and assumptions related to discount rates, revenue growth rates, projected margins, and customer revenue attrition rates. Certain business acquisitions include contingent consideration. Contingent consideration is recorded at its fair value, using a Black-Scholes model, within other liabilities or other long-term liabilities, as appropriate. The fair value of contingent consideration involves the use of significant estimates and assumptions related to risks associated with earnout, i.e. risk in the underlying metric, risk in the earnout structure, counterparty credit risk, projected revenue, the revenue discount rate, the revenue volatility, and the Company's credit adjusted discount rate. Subsequent adjustments to these assumptions can cause changes to the measure of contingent consideration. The Company adjusts the preliminary purchase price allocation, as necessary, during the measurement period of up to one year after the acquisition closing date as the Company obtains more F- 17 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 information as to facts and circumstances existing at the acquisition date. Acquisition-related costs are recognized separate from the acquisition and are expensed as incurred. Consolidation of Joint Ventures and Variable Interest Entities The Company participates in joint ventures, which include partnerships and partially owned limited liability corporations, 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 joint venture is determined to be a variable interest entity (“VIE”) for which the Company is the primary beneficiary, as described below. A VIE is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional financial support; (b) as a group, the holders of the equity investment at risk lack the ability to make certain decisions, the obligation to absorb expected losses or the right to receive expected residual returns; or (c) an equity investor has voting rights that are disproportionate to its economic interest and substantially all of the entity’s activities are on behalf of the investor with disproportionately low voting rights. The Company’s VIEs may be funded through contributions, loans and/or advances from the joint venture partners or by advances and/or letters of credit provided by clients. Certain VIEs are directly governed, managed, operated and administered by the joint venture partners. Others have no employees and, although these entities own and hold the contracts with the clients, the services required by the contracts are typically performed by the joint venture partners or by other subcontractors. The Company is considered the primary beneficiary and required to consolidate a VIE if it has the power to direct the activities that most significantly impact that VIE’s economic performance, and the obligation to absorb losses or the right to receive benefits of that VIE that could potentially be significant to the VIE. In determining whether the Company is the primary beneficiary, significant assumptions and judgments include the following: (1) identifying the significant activities and the parties that have the power to direct them; (2) reviewing the governing board composition and participation ratio; (3) determining the equity, profit and loss ratio; (4) determining the management-sharing ratio; (5) reviewing employment terms; and (6) reviewing the funding and operating agreements. Examples of significant activities currently being performed by the Company’s significant consolidated and unconsolidated joint ventures include engineering and design services; management consulting services; procurement and construction services; program management; construction management; and operations and maintenance services. If the Company determines that the power to direct the significant activities is shared by two or more joint venture parties, then there is no primary beneficiary and no party consolidates the VIE. In making the shared-power determination, the Company analyzes the key contractual terms, governance, related party and de facto agency as they are defined in the accounting standard, and other arrangements. Goodwill The Company performs a goodwill impairment test annually, on October 1 st of each year and additionally, performs a quarterly qualitative assessment to address whether a triggering event has occurred that would require an impairment test in the interim period. For purposes of impairment testing, goodwill is allocated to the applicable reporting units based on the current reporting structure. Reporting units are operating segments or components of operating segments where discrete financial information is available and segment management regularly reviews the operating results. When evaluating goodwill for impairment, the Company may decide to first perform a qualitative assessment, or “step zero” impairment test, to determine whether it is more likely than not that impairment has occurred. If the Company does not perform a qualitative assessment, or if the Company determines that it is not more likely than not that the fair value of its reporting units exceeds their carrying amounts, the Company performs a quantitative assessment and calculates the estimated F- 18 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 fair value of the respective reporting unit. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in the amount the carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The Company’s decision to perform a qualitative impairment assessment in a given year is influenced by a number of factors, including the significance of the excess of the Company’s estimated fair value over carrying value at the last quantitative assessment date, the amount of time in between quantitative fair value assessments, and the date of its acquisitions, if any. Intangible Assets Intangible assets with finite lives arise from business acquisitions and are amortized based on the period over which the contractual or economic benefit of the intangible assets are expected to be realized or on a straight-line basis over the useful lives of the underlying assets, ranging from one to sixteen years . These primarily consist of customer relationships, developed technology, backlog, and covenants not to compete. When indicators of a potential impairment exist, the Company assesses the recoverability of the unamortized balance of its intangible assets by first comparing undiscounted expected cash flows associated with the asset, or the asset group they are part of, to its carrying value. Should the review indicate that the carrying value is not fully recoverable, the excess of the carrying value over the fair value of the intangible assets would be recognized as an impairment loss. Income Taxes Income taxes are accounted for under the asset and liability method. This approach requires the recognition of deferred tax liabilities and assets to reflect the tax effects of temporary differences between the financial statement carrying amounts and tax basis of the Company’s assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to be in effect when the asset or liability is recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. Deferred tax assets are evaluated for future realization and valuation allowances are established when, in our opinion, it is more likely than not that all or some portion of the asset will not be realized. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements on a particular tax position are measured based on the largest benefit that is greater than 50 percent likely of being realized. The amount of unrecognized tax benefits (“UTB”) is adjusted as appropriate for changes in facts and circumstances, such as significant amendments to existing tax law, new regulations or interpretations by the taxing authorities, new information obtained during a tax examination, or resolution of an examination. The Company recognizes both accrued interest and penalties, where appropriate, related to UTBs in income tax expense. Foreign Currency Translation The Company’s reporting currency is the U.S. Dollar. The functional currency of the Company’s foreign entities is typically the currency of the primary environment in which they operate. For foreign entities whose functional currency is not the U.S. dollar, the assets and liabilities are translated based on exchange rates in effect at the balance sheet date, while the income and expense accounts are translated using the average exchange rates during the period. Translation gains or losses, net of income tax effects, are reflected in accumulated other comprehensive income on the consolidated balance sheets. Transaction gains and losses due to movements in exchange rates between the functional currency and the currency in which a foreign currency transaction is denominated are recognized as “Other income (expense), net” in the Company’s consolidated statements of income. F- 19 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 Self-Insurance The Company typically utilizes third-party insurance subject to varying retention levels or self-insurance. The Company is self-insured for a portion of the losses and liabilities primarily associated with workers’ compensation, general, professional, automobile, employee matters, certain medical plans, and project-specific liability claims. Losses are accrued based upon the Company’s estimates of the aggregate liability for claims incurred using historical experience and certain actuarial assumptions, as provided by an independent actuary. The estimate of self-insurance liability includes an estimate of incurred but not reported claims, based on data compiled from historical experience. New Accounting Pronouncements In the fourth quarter of 2024, The Financial Accounting Standards Board ("FASB") Issued Accounting Standards Update (“ASU”) 2024-04, "Debt—Debt with Conversion and Other Options (Subtopic 470-20)" ("ASU 2024-04"). ASU 2024-04 improves the relevance and consistency in application of the induced conversion guidance in Subtopic 470-20, Debt– Debt with Conversion and Other Options . The amendments in ASU 2024-04 clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. Under the amendments, to account for a settlement of a convertible debt instrument as an induced conversion, an inducement offer is required to provide the debt holder with, at a minimum, the consideration (in form and amount) issuable under the conversion privileges provided in the terms of the instrument. The amendments in this Update are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in ASU 2020-06. The Company adopted ASU 2020-06 in the first quarter of 2021. The Company has elected to early adopt ASU 2024-04 as of January 1, 2024 on a prospective basis. The adoption of this ASU had a material impact on the Company's consolidated financial statements. In the fourth quarter of 2024, The FASB Issued ASU 2024-03 "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)" (ASU 2024-03"). ASU 2024-03 requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The adoption of this ASU will only impact disclosures and will no t have a material impact on the Company's consolidated financial statements. In the fourth quarter of 2023, The FASB Issued Accounting Standards Update (“ASU”) 2023-09, "Income Taxes (Topic 740)" ("ASU 2023-09"). ASU 2023-09 enhances the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 addresses investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. ASU 2023-09 also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. We adopted the standard and applied the disclosure requirements on a prospective basis effective for the year ended December 31, 2025. This ASU was adopted in the fourth quarter of 2025 , prospectively. The adoption of this ASU will only impact disclosures and did no t have a material impact on the Company's consolidated financial statements. In the fourth quarter of 2023, The FASB Issued ASU 2023-07, "Segment Reporting (Topic 280)". ASU 2023-07 introduces enhanced disclosures about significant segment expenses along with other enhanced segment disclosures. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The adoption of this ASU only impacted disclosures and did no t have a material impact on the Company's consolidated financial statements. F- 20 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 3. Acquisitions Applied Sciences Consulting, Inc. On October 1, 2025, the Company acquired a 100 % ownership interest in Applied Sciences Consulting, Inc. ("ASC"), a privately owned company, for $ 28.1 million from cash on hand. ASC specializes in water and stormwater solutions for cities, counties, and water management districts across the state of Florida. ASC enhances our ability to partner with Florida communities on delivering innovative solutions for their resiliency challenges, while expanding those capabilities to new and existing clients around the world. In connection with this acquisition, the Company recognized $ 0.5 million of acquisition-related expenses in “Selling, general and administrative expense” in the consolidated statements of income for the year ended December 31, 2025, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. The following table summarizes the acquisition date fair value of the purchase consideration transferred (in thousands): Amount Cash and cash equivalents $ 1,352 Accounts receivable 1,210 Right of use assets, operating leases 586 Property and Equipment 140 Goodwill 21,852 Intangible assets 4,590 Accounts payable ( 557 ) Short-term lease liabilities, operating leases ( 107 ) Accrued expenses and other current liabilities ( 418 ) Long-term lease liabilities, operating leases ( 511 ) Net assets acquired $ 28,137 Of the total purchase price, the following values were preliminarily assigned to intangible assets (in thousands, except for years): Gross Carrying Amount Amortization Period (in years) Backlog $ 2,460 3 Customer relationships 1,840 3 Non-compete agreements 220 3 Trade name 70 1 Amortization expense of $ 0.4 million related to these intangible assets was recorded for the year ended December 31, 2025. The entire value of goodwill was assigned to the Critical Infrastructure reporting unit and represents synergies expected to be realized from this business combination. The entire value of goodwill is deductible for tax purposes. The amount of revenue generated by ASC and included within consolidated revenue is $ 2.3 million for the year ended December 31, 2025. 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. The Company is still in the process of finalizing its valuation of the assets and liabilities acquired. F- 21 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 Supplemental Pro Forma Information (Unaudited) Supplemental information of unaudited pro forma operating results assuming the ASC acquisition had been consummated as of the beginning of fiscal year 2024 (in thousands) is as follows: 2025 2024 (unaudited) (unaudited) Pro forma Revenue $ 6,371,493 $ 6,756,823 Pro forma Net Income including noncontrolling interests 310,257 289,861 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, and the pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses which are reflected in the earliest period presented. 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. Chesapeake Technology International, Corp On June 30, 2025, the Company acquired a 100 % ownership interest in Chesapeake Technology International, Corp ("CTI"), a privately owned company, for $ 91.5 million from cash on hand. CTI brings extensive capabilities as an all-domain technology solutions provider, powered by cutting-edge products that enhance the warfighters’ ability to sense, evaluate and deliver effects within the invisible battlespaces. CTI enhances our mission-ready solutions for the Department of War. In connection with this acquisition, the Company recognized $ 2.2 million of acquisition-related expenses in “Selling, general and administrative expense” in the consolidated statements of income for the year ended December 31, 2025, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. The following table summarizes the acquisition date fair value of the purchase consideration transferred (in thousands): Amount Cash and cash equivalents $ 4,769 Accounts receivable 28,145 Contract assets 4,256 Inventory 169 Right of use assets, operating leases 2,310 Prepaid expenses and other current assets 498 Property and Equipment 1,029 Goodwill 57,468 Intangible assets 34,820 Other noncurrent assets 3,173 Accounts payable ( 17,818 ) Short-term lease liabilities, operating leases ( 143 ) Accrued expenses and other current liabilities ( 7,471 ) Contract liabilities ( 8,079 ) Deferred income taxes ( 5,446 ) Long-term lease liabilities, operating leases ( 2,167 ) Other long-term liabilities ( 3,979 ) Net assets acquired $ 91,534 F- 22 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 Of the total purchase price, the following values were preliminarily assigned to intangible assets (in thousands, except for years): Gross Carrying Amount Amortization Period (in years) Customer relationships $ 20,690 15 Backlog 8,010 5 Developed technologies 3,000 3 Non-compete agreements 2,460 3 Trade name $ 660 1 Amortization expense of $ 2.7 million related to these intangible assets was recorded for the year ended December 31, 2025. The entire value of goodwill was assigned to the Federal Solutions reporting unit and represents synergies expected to be realized from this business combination. $ 8.8 million of goodwill is deductible for tax purposes. The amount of revenue generated by CTI and included within consolidated revenue is $ 36.2 million for the year ended December 31, 2025. 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. The Company is still in the process of finalizing its valuation of the assets and liabilities acquired. Supplemental Pro Forma Information (Unaudited) Supplemental information of unaudited pro forma operating results assuming the CTI acquisition had been consummated as of the beginning of fiscal year 2024 (in thousands) is as follows: 2025 2024 (unaudited) (unaudited) Pro forma Revenue $ 6,419,805 $ 6,840,001 Pro forma Net Income including noncontrolling interests 312,214 278,473 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, and the pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses which are reflected in the earliest period presented. 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. TRS Group, Inc. On January 31, 2025, the Company acquired a 100 % ownership interest in TRS Group, Inc. ("TRS") a privately owned company, for $ 36.6 million from cash on hand (of which $ 3.8 million will be paid in July 2026). TRS is an environmental solutions firm that specializes in remediation technology. In connection with this acquisition, the Company recognized $ 0.5 million of acquisition-related expenses in “Selling, general and administrative expense” in the consolidated statements of income for the year ended December 31, 2025, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. F- 23 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 The following table summarizes the acquisition date fair value of the purchase consideration transferred (in thousands): Amount Cash and cash equivalents $ 2,054 Accounts receivable 3,390 Contract assets 2,277 Income taxes receivable 354 Prepaid expenses and other current assets 2,414 Property and Equipment 5,832 Goodwill 22,972 Intangible assets 6,100 Accounts payable ( 1,095 ) Accrued expenses and other current liabilities ( 3,270 ) Contract liabilities ( 4,222 ) Short-term lease liabilities, operating leases ( 116 ) Long-term lease liabilities, operating leases ( 124 ) Net assets acquired $ 36,566 Of the total purchase price, the following values were assigned to intangible assets (in thousands, except for years): Gross Carrying Amount Amortization Period (in years) Backlog $ 1,900 3 Developed technologies 3,900 5 Trade name $ 300 1 Amortization expense of $ 1.6 million related to these intangible assets was recorded for the year ended December 31, 2025 . The entire value of goodwill was assigned to the Critical Infrastructure reporting unit and represents synergies expected to be realized from this business combination. The entire value of goodwill is deductible for tax purposes. The amount of revenue generated by TRS and included within consolidated revenue is $ 28.5 million for the year ended December 31, 2025 . The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition. Supplemental Pro Forma Information (Unaudited) Supplemental information of unaudited pro forma operating results assuming the TRS acquisition had been consummated as of the beginning of fiscal year 2024 (in thousands) is as follows: 2025 2024 (unaudited) (unaudited) Pro forma Revenue $ 6,366,268 $ 6,779,739 Pro forma Net Income including noncontrolling interests 309,913 287,387 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 F- 24 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 to the fair value of acquired intangible assets, and the pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses which are reflected in the earliest period presented. 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. BCC Engineering, LLC On November 1, 2024, the Company acquired a 100 % ownership interest in BCC Engineering, LLC ("BCC") a privately owned company, for $ 233.5 million from cash on hand. BCC is a full-service engineering firm that provides planning, design, and management services for transportation, civil and structural engineering projects in Florida, Georgia, Texas, South Carolina, and Puerto Rico. This acquisition strengthens Parsons’ position as an infrastructure leader while expanding the company’s reach in the southeastern United States. In connection with this acquisition, the Company recognized $ 4.2 million of acquisition-related expenses in “Selling, general and administrative expense” in the consolidated statements of income for the year ended December 31, 2024, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. The following table summarizes the acquisition date fair value of the purchase consideration transferred (in thousands): Amount Cash and cash equivalents $ 2,839 Accounts receivable 23,240 Contract assets 16,649 Prepaid expenses and other current assets 2,483 Right of use assets, operating leases 9,438 Property and Equipment 1,586 Other noncurrent assets 1,744 Goodwill 176,582 Intangible assets 32,400 Accounts payable ( 8,668 ) Accrued expenses and other current liabilities ( 7,296 ) Contract liabilities ( 4,446 ) Short-term lease liabilities, operating leases ( 2,090 ) Deferred income taxes ( 2,299 ) Long-term lease liabilities, operating leases ( 7,462 ) Other long-term liabilities ( 1,183 ) Net assets acquired $ 233,517 Of the total purchase price, the following values were assigned to intangible assets (in thousands, except for years): Gross Carrying Amount Amortization Period (in years) Customer relationships $ 6,500 4 Backlog 23,400 4 Non-compete agreements 1,700 3 Other $ 800 1 Amortization expense of $ 8.7 million and $ 1.5 million related to these intangible assets was recorded for the year ended December 31,2025 and December 31, 2024, respectively. The entire value of goodwill was assigned to the Critical Infrastructure reporting unit and represents synergies expected to be realized from this business combination. $ 45.8 million of goodwill is deductible for tax purposes. F- 25 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 The amount of revenue generated by BCC and included within consolidated revenue is $ 20.3 million for the year ended December 31, 2024. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition. Supplemental Pro Forma Information (Unaudited) Supplemental information of unaudited pro forma operating results assuming the BCC acquisition had been consummated as of the beginning of fiscal year 2023 (in thousands) is as follows: 2024 2023 (unaudited) (unaudited) Pro forma Revenue $ 6,838,190 $ 5,537,090 Pro forma Net Income including noncontrolling interests 286,948 189,200 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, and the pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses. 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. BlackSignal Technologies, LLC. On August 16, 2024, the Company acquired a 100 % ownership interest in BlackSignal Technologies, LLC, ("BlackSignal") a privately-owned company, for $ 203.7 million from cash on hand. Headquartered in Chantilly, Virginia, BlackSignal is a next-generation digital signal processing, electronic warfare, and cyber security provider built to counter near peer threats. Parsons believes that the acquisition will expand Parsons' customer base across the Department of War and Intelligence Community and significantly strengthen Parsons' positioning within cyber warfare, while adding new capabilities in the counterspace radio frequency domain. In connection with this acquisition, the Company recognized $ 2.5 million of acquisition-related expenses in “Selling, general and administrative expense” in the consolidated statements of income for the year ended December 31, 2024, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. The following table summarizes the acquisition date fair value of the purchase consideration transferred (in thousands): Amount Cash and cash equivalents $ 4,917 Accounts receivable 5,171 Contract assets 3,209 Prepaid expenses and other current assets 447 Right of use assets, operating leases 5,370 Property and Equipment 997 Goodwill 116,849 Intangible assets 97,600 Other assets 145 Accounts payable ( 951 ) Accrued expenses and other current liabilities ( 4,999 ) Short-term lease liabilities, operating leases ( 800 ) Deferred income taxes ( 19,647 ) Long-term lease liabilities, operating leases ( 4,570 ) Net assets acquired $ 203,738 F- 26 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 Of the total purchase price, the following values were assigned to intangible assets (in thousands, except for years): Gross Carrying Amount Amortization Period (in years) Customer relationships $ 73,900 14 Backlog 11,700 3 Developed technologies 5,200 5 Non-compete agreements 6,100 3 Other $ 700 1 Amortization expense of $ 12.7 million and $ 4.3 million related to these intangible assets was recorded for the year ended December 31,2025 and December 31, 2024, respectively . The entire value of goodwill was assigned to the Federal Solutions reporting unit and represents synergies expected to be realized from this business combination. $ 17.1 million of goodwill is deductible for tax purposes. The amount of revenue generated by BlackSignal and included within consolidated revenue is $ 22.7 million for the year ended December 31, 2024. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition. Supplemental Pro Forma Information (Unaudited) Supplemental information of unaudited pro forma operating results assuming the BlackSignal acquisition had been consummated as of the beginning of fiscal year 2023 (in thousands) is as follows: 2024 2023 (unaudited) (unaudited) Pro forma Revenue $ 6,782,552 $ 5,481,036 Pro forma Net Income including noncontrolling interests 283,900 185,954 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, and the pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses. 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. I.S. Engineers, LLC On October 31, 2023, the Company entered into a Membership Interest Purchase Agreement to acquire a 100 % ownership interest in I.S. Engineers, LLC (“I.S. Engineers”), a privately-owned company, for $ 12.2 million in cash. Headquartered in Texas, I.S. Engineers provides full service consulting specializing in transportation engineering, including roads and highways, and program management. The acquisition was entirely funded by cash on-hand. In connection with this acquisition, the Company recognized $ 0.3 million of acquisition related “Selling, general and administrative expense” in the consolidated statements of income for the year ended December 31, 2023, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. The Company allocated the purchase price to the appropriate classes of tangible assets and liabilities and assigned the excess of $ 11.9 million entirely to goodwill. The entire value of goodwill was assigned to the Critical Infrastructure reporting unit and represents synergies expected to be realized from this business combination. No goodwill is deductible for income tax purposes. F- 27 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 Sealing Technologies, Inc. On August 23, 2023, the Company acquired a 100 % ownership interest in Sealing Technologies, Inc (“SealingTech”), a privately-owned company, for $ 176.0 million in cash and up to an additional $ 25 million in the event an earn out revenue target is exceeded. The Company borrowed $ 175 million under the Credit Agreement to partially fund the acquisition. Headquartered in Maryland, SealingTech expands Parsons’ customer base across the Department of War and Intelligence Community, and further enhances the company’s capabilities in defensive cyber operations; integrated mission-solutions powered by artificial intelligence (AI) and machine learning (ML); edge computing and edge access modernization; critical infrastructure protection; and secure data management. In connection with this acquisition, the Company recognized $ 3.3 million of acquisition-related expenses in “Selling, general and administrative expense” in the consolidated statements of income for the year ended December 31, 2023, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. The Company agreed to pay the selling shareholders up to an additional $ 25 million in the event an earn out revenue target of $ 110 million is exceeded during the fiscal year ended December 31, 2024. The earn out payment due and payable by the Company to the selling shareholders shall be equal to (i) five-tenths ( 0.5 ), multiplied by (ii) the difference of (A) the actual earn out revenue minus (B) the earn out revenue target; provided, however, that in no event shall the earn out payment exceed $ 25 million. In the event that the earn out revenue is less than or equal to the earn out revenue target, the earn out payment shall be zero . The earn out payment, if any, shall be paid by the Company to the selling shareholders within 15 days following the date the earn out statement becomes final and binding on both parties. The fair value of the earn out (contingent consideration in the table below) was calculated using a Black-Scholes model. See "Note 2— Summary of Significant Accounting Policies" and "Note 18—Fair Value " for further information on how the fair value of contingent consideration is determined. The following table summarizes the acquisition date fair value of the purchase consideration transferred (in thousands): Amount Cash paid at closing $ 176,028 Fair value of contingent consideration to be achieved 3,231 Total purchase price $ 179,259 At the conclusion of the earn out period, the Company paid zero contingent consideration. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed based on the purchase price allocation as of the date of acquisition (in thousands): Amount Cash and cash equivalents $ 8,133 Accounts receivable 17,889 Contract assets 2,946 Prepaid expenses and other current assets 1,379 Property and equipment 2,025 Right of use assets, operating leases 1,836 Deferred tax assets 357 Goodwill 90,593 Intangible assets 75,000 Accounts payable ( 15,987 ) Accrued expenses and other current liabilities ( 2,408 ) Contract liabilities ( 668 ) Short-term lease liabilities, operating leases ( 418 ) Long-term lease liabilities, operating leases ( 1,418 ) Net assets acquired $ 179,259 F- 28 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 Of the total purchase price, the following values were assigned to intangible assets (in thousands, except for years): Gross Carrying Amount Amortization Period (in years) Customer relationships $ 40,000 14 Backlog 26,000 3 Developed technologies 8,000 3 Other $ 1,000 1 Amortization expense of $ 12.0 million, $ 12.9 million and $ 7.0 million related to these intangible assets was recorded for the year ended December 31,2025, December 31,2024 and December 31, 2023, respectively. The entire value of goodwill was assigned to the Federal Solutions reporting unit and represents synergies expected to be realized from this business combination. The entire value of goodwill is deductible for tax purposes. The amount of revenue generated by SealingTech and included within consolidated revenue is $ 34.1 million for the year December 31, 2023. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition. Supplemental Pro Forma Information (Unaudited) Supplemental information of unaudited pro forma operating results assuming the SealingTech acquisition had been consummated as of the beginning of fiscal year 2022 (in thousands) is as follows: 2023 (unaudited) Pro forma Revenue $ 5,525,099 Pro forma Net Income including noncontrolling interests 216,157 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, and the pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses. 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. IPKeys Power Partners On April 13, 2023, the Company entered into a merger agreement to acquire a 100 % ownership interest in IPKeys Power Partners (“IPKeys”), a privately-owned company, for $ 43.0 million in cash. The merger brings IPKeys' established customer base, expanding Parsons' presence in two rapidly growing end markets: grid modernization and cyber resiliency for critical infrastructure. Headquartered in Tinton Falls, New Jersey, IPKeys is a trusted provider of enterprise software platform solutions that is actively delivering cyber and operational security to hundreds of electric, water, and gas utilities across North America. The acquisition was entirely funded by cash on-hand. In connection with this acquisition, the Company recognized $ 0.6 million of acquisition-related expenses in “Selling, general and administrative expense” in the consolidated statements of income for the year ended December 31, 2023, respectively, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed based on the purchase price allocation as of the date of acquisition (in thousands): F- 29 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 Amount Cash and cash equivalents $ 126 Accounts receivable 3,937 Contract assets 834 Prepaid expenses and other current assets 455 Property and equipment 86 Right of use assets, operating leases 1,105 Other noncurrent assets 152 Goodwill 22,407 Intangible assets 23,000 Accounts payable ( 541 ) Accrued expenses and other current liabilities ( 1,768 ) Contract liabilities ( 1,936 ) Short-term lease liabilities, operating leases ( 343 ) Deferred tax liabilities ( 3,713 ) Long-term lease liabilities, operating leases ( 762 ) Net assets acquired $ 43,039 Of the total purchase price, the following values were assigned to intangible assets (in thousands, except for years): Gross Carrying Amount Amortization Period (in years) Customer relationships (1) $ 15,900 16 Developed technologies 7,000 11 Other $ 100 1 (1) The acquired business is a SaaS commercial business. Backlog for this type of business is included as customer relationships. Amortization expense of $ 1.6 million, $ 1.6 million and $ 1.4 million related to these intangible assets was recorded for the year ended December 31,2025, December 31, 2024 and December 31, 2023, respectively. The entire value of goodwill was assigned to the Critical Infrastructure reporting unit and represents synergies expected to be realized from this business combination. $ 0.9 million of goodwill is deductible for tax purposes. The amount of revenue generated by IPKeys and included within consolidated revenue is $ 9.3 million for the year ended December 31, 2023. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition. Supplemental Pro Forma Information (Unaudited) Supplemental information of unaudited pro forma operating results assuming the IPKeys acquisition had been consummated as of the beginning of fiscal year 2022 (in thousands) is as follows: 2023 (unaudited) Pro forma Revenue $ 5,445,604 Pro forma Net Income including noncontrolling interests 209,773 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, and the pro forma impact of reflecting acquisition costs, F- 30 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 which consisted of legal, advisory and due diligence fees and expenses. 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. 4. Contracts with Customers Disaggregation of Revenue The Company’s contracts contain both fixed price and cost reimbursable components. Contract types are based on the component that represents the majority of the contract. The following table presents revenue disaggregated by contract type (in thousands): December 31, 2025 December 31, 2024 December 31, 2023 Fixed-Price $ 2,138,910 $ 2,844,719 $ 1,810,499 Time-and-Materials 1,536,052 1,419,168 1,352,871 Cost-Plus 2,689,283 2,486,689 2,279,379 Total $ 6,364,245 $ 6,750,576 $ 5,442,749 Refer to “Note 20— Segments Information ” for the Company’s revenues by business lines. Contract Assets and Contract Liabilities Contract assets and contract liabilities balances at December 31, 2025 and December 31, 2024 were as follows (in thousands): December 31, 2025 December 31, 2024 $ change % change Contract assets $ 915,806 $ 741,504 $ 174,302 23.5 % Contract liabilities 340,113 289,799 50,314 17.4 % Net contract assets (liabilities) (1) $ 575,693 $ 451,705 $ 123,988 27.4 % (1) Total contract retentions included in net contract assets (liabilities) were $ 114.6 million as of December 31, 2025, of which $ 53.8 million are not expected to be paid in 2026. Total contract retentions included in net contract assets (liabilities) were $ 89.8 million as of December 31, 2024. Contract assets at December 31, 2025 and December 31, 2024 include approximately $ 58.9 million and $ 70.7 million , respectively, related to net claim recovery estimates. For the years ended December 31, 2025 and December 31, 2024 , there were $ 12.0 million and $ 21.6 million, respectively of losses recognized related to the reduction in estimated claims recovery. During the years ended December 31, 2025 and December 31, 2024, the Company recognized revenue of approximately $ 193.6 million and $ 190.3 million , respectively, that was included in the corresponding contract liability balance at December 31, 2024 and December 31, 2023 , respectively. Certain changes in contract assets and contract liabilities consisted of the following: December 31, 2025 December 31, 2024 Acquired contract assets $ 6,533 $ 19,858 Acquired contract liabilities 12,301 4,446 F- 31 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 There was no significant impairment of contract assets recognized during the years ended December 31, 2025 and December 31, 2024. 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. December 31, 2025 December 31, 2024 December 31, 2023 Revenue impact, net $ ( 6,345 ) $ ( 55,952 ) $ 5,428 Certain financial statement impacts from revisions in estimates were as follows (in thousands): December 31, 2025 December 31, 2024 December 31, 2023 Operating income (loss) $ ( 29,011 ) $ ( 62,298 ) $ 35,297 Net income (loss) ( 21,961 ) ( 47,651 ) 26,261 The amounts for 2025, in the table above, include the impact from contracts in the Federal Solutions segment related to a change in estimate increasing direct costs of contracts by $ 22.7 million. The amounts for 2024, in the table above, include the impact from a contract in the Critical Infrastructure segment related to a change in estimate increasing direct costs of contracts by $ 6.3 million. The amounts for 2023, in the table above, include the impact from contracts in the Critical Infrastructure segment related to a change in estimate increasing direct costs of contracts by $ 8.0 million related to net write-downs and a decrease in direct costs of contracts of $ 37.9 million related to a legal matter. These impacts do not include the operating income impacts disclosed below in "Note 16— Investments in and Advances to Joint Ventures. " Accounts Receivable, Net Accounts receivable, net consisted of the following as of December 31, 2025 and December 31, 2024 (in thousands): 2025 2024 Billed $ 732,414 $ 712,046 Unbilled 395,889 392,236 Total accounts receivable, gross 1,128,303 1,104,282 Allowance for doubtful accounts ( 3,886 ) ( 3,886 ) Total accounts receivable, net $ 1,124,417 $ 1,100,396 Billed accounts receivable represents amounts billed to clients that have not been collected. Unbilled accounts receivable represents amounts where the Company has a present contractual right to bill but an invoice has not been issued to the customer at the period-end date. Receivables from contracts with the U.S. federal government and its agencies were 19 % and 23 % as of December 31, 2025 and December 31, 2024, respectively. 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 F- 32 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 government agency or commercial sector client, and general economic conditions and particular industry conditions that may affect a client’s ability to pay. Transaction Price Allocated to the Remaining Unsatisfied Performance Obligations The Company’s remaining unsatisfied performance obligations (“RUPO”) as of December 31, 2025 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress. The Company had $ 7.1 billion in RUPO as of December 31, 2025. 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. 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 December 31, 2025 over the following periods (in thousands): Period RUPO Will Be Satisfied Within One Year Within One to Two Years Thereafter Federal Solutions $ 1,826,145 $ 468,713 $ 129,435 Critical Infrastructure 2,276,922 1,299,426 1,081,343 Total $ 4,103,067 $ 1,768,139 $ 1,210,778 5. Leases 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 ten 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 after the third year. The components of lease costs for the years ended December 31, 2025 and December 31, 2024 are as follows (in thousands): 2025 2024 Operating lease cost $ 65,571 $ 64,858 Short-term lease cost 16,398 17,114 Amortization of right-of-use assets 4,507 3,549 Interest on lease liabilities 524 434 Sublease income ( 3,730 ) ( 4,289 ) Total lease cost $ 83,270 $ 81,666 F- 33 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 Supplemental cash flow information related to leases for the years ended December 31, 2025 and December 31, 2024 is as follows (in thousands): 2025 2024 Operating cash flows for operating leases $ 66,841 $ 67,696 Operating cash flows for financing activities 524 434 Financing cash flows for finance leases 4,383 3,376 Right-of-use assets obtained in exchange for new operating lease liabilities 26,574 36,583 Right-of-use assets obtained in exchange for new finance lease liabilities 2,606 4,220 Supplemental balance sheet and other information related to leases as of December 31, 2025 and December 31, 2024 is as follows (in thousands): 2025 2024 Operating Leases: Right-of-use assets $ 126,770 $ 153,048 Lease liabilities: Current 45,353 52,725 Long-term 94,044 114,386 Total operating lease liabilities $ 139,397 $ 167,111 Finance Leases: Other noncurrent assets $ 8,990 $ 9,864 Accrued expenses and other current liabilities $ 4,118 $ 3,645 Other long-term liabilities $ 5,240 $ 6,441 Weighted Average Remaining Lease Term: Operating leases 3.7 Years 3.9 Years Finance leases 2.6 Years 2.8 Years Weighted Average Discount Rate: Operating leases 4.6 % 4.5 % Finance leases 4.9 % 5.0 % As of December 31, 2025 , the Company has no additional operating leases that have not yet commenced. A maturity analysis of the future undiscounted cash flows associated with the Company’s operating and finance lease liabilities as of December 31, 2025 is as follows (in thousands): Operating Leases Finance Leases 2026 $ 50,952 $ 4,546 2027 35,670 3,293 2028 29,467 1,950 2029 21,893 504 2030 8,540 58 Thereafter 5,147 - Total lease payments 151,669 10,351 Less: imputed interest ( 12,272 ) ( 993 ) Total present value of lease liabilities $ 139,397 $ 9,358 F- 34 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 Rental expense for the years ended December 31, 2025, December 31, 2024 and December 31, 2023 was $ 82.0 million , $ 82.0 million and $ 81.0 million, respectively, and is recorded in “Selling, general and administrative expenses” in the consolidated statements of income. 6. Employee Stock Purchase and Equity-Based Compensation Plans Equity Compensation Plan Information The following table provides information as of December 31, 2025 regarding compensation plans under which our equity securities are authorized for issuance. Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) Equity compensation plans approved by security holders (1) - - 1,217,941 (2) Equity compensation plans not approved by security holders 1,591,245 (3) - 6,931,420 (4) Total 1,591,245 - 8,149,361 (1) Consists of the 2020 Employee Stock Purchase Plan. (2) Amount represents 1,217,941 shares remaining available for future issuance under the 2020 Employee Stock Purchase Plan (of which 79,496 shares were purchased pursuant to the offering period that ended on December 31, 2025). (3) Amount represents the sum of 1,591,245 shares of common stock subject to outstanding RSU and PSU awards under the 2019 Incentive Plan (with PSU awards reflected at “target” levels), (4) Amount represents 6,931,420 shares remaining available for future issuance under the 2019 Incentive Plan. Employee Stock Purchase Plan The Parsons Corporation Employee Stock Purchase Plan (“ESPP”) was adopted effective March 1, 2020. Under the ESPP, eligible employees who elect to participate are granted the right to purchase shares of Parsons common stock at a discount of 5 % of the market value on the last trading day of the offering period. The following table presents stock issuance activity for the years ended December 31, 2025 and December 31, 2024 (in thousands): 2025 2024 Purchase price paid for shares sold $ 9,464 $ 7,935 Number of shares sold 150 96 The average purchase price for the year ended December 31, 2025 and December 31, 2024 was $ 63.09 and $ 82.66 per share, respectively. Equity-Based Compensation Plans The Company issues stock-based awards through the Incentive Award Plan. The compensation expense for these awards is recorded in “Selling, general and administrative expenses” in the Company’s consolidated financial statements. F- 35 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 Stock-based compensation expense was $ 34.0 million, $ 52.6 million, and $ 27.5 million for the years ended December 31, 2025, December 31, 2024 and December 31, 2023 , respectively, net of recognized tax benefits of $ 6.2 million, $ 8.9 million, and $ 8.6 million for 2025, 2024 and 2023, respectively. The tax benefit realized related to awards vested during 2025, 2024, and 2023 was $ 9.1 million, $ 12.0 million, and $ 4.3 million, respectively. We recognize forfeitures as they occur. At December 31, 2025 , the amount of compensation cost relating to non-vested awards not yet recognized in the consolidated financial statements is $ 37.5 million. The majority of these unrecognized compensation costs will be recognized by the fourth quarter of fiscal 2027. Restricted Stock Units Restricted Stock Units awards are issued under the Incentive Award Plan and are settled by the issuance of the Company’s common stock. Outstanding awards have been granted based on either service or service and performance conditions. Awards vest over three-year periods, either annually or cliff. Expense is recognized on an accelerated basis for awards with service conditions only and on a straight-line basis for awards that include performance conditions. Expense recognition of awards with performance criteria are subject to the probability of meeting the performance conditions and adjusted for the number of shares expected to be earned. Compensation cost for awards with performance conditions are trued-up at each reporting period for changes in the expected shares pro-rated for the portion of the requisite service period rendered. For awards that include market conditions, the grant date fair value is determined using a Monte Carlo simulation. Inputs to the Monte Carlo model include the vesting period, historical stock volatilities for Parsons and a peer group commensurate with a look back period equal to the vesting period. The following table presents the number of shares of restricted stock units granted (at target shares for awards with performance conditions) for the years ended December 31, 2025, December 31, 2024 and December 31, 2023: December 31, 2025 December 31, 2024 December 31, 2023 Restricted Stock Units (service condition) 401,974 346,483 616,337 Restricted Stock Units (service and performance condition) 359,146 296,513 452,179 The number of units granted for awards with performance conditions in the above table is based on performance at the target amount. The number of shares ultimately issued, which could be greater or less than target, will be based on achieving specific performance conditions related to the awards. During the years ended December 31, 2025 and December 31, 2024, certain restricted stock unit grants with performance conditions vested with performance different from the target share amounts. As a result, 156,312 and 99,280 additional shares, respectively were granted and vested. F- 36 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 The following table presents the number and weighted average grant-date fair value of restricted stock units (at target shares for awards with performance conditions) for the years ended December 31, 2025, December 31, 2024 and December 31, 2023: Number of Units Weighted Average Grant-Date Fair Value Outstanding at December 31, 2022 1,621,155 $ 37.49 Granted 1,068,516 48.96 Vested ( 372,962 ) 37.56 Forfeited ( 223,373 ) 39.90 Outstanding at December 31, 2023 2,093,336 43.11 Granted 642,996 79.71 Vested ( 697,956 ) 37.83 Forfeited ( 155,358 ) 45.33 Outstanding at December 31, 2024 1,883,018 57.35 Granted 761,120 50.20 Vested ( 855,126 ) 41.88 Forfeited ( 197,767 ) 52.84 Outstanding at December 31, 2025 1,591,245 $ 62.80 For the year ended December 31, 2025 , 988,128 shares of restricted stock units were issued, and 347,450 shares of common stock related to employee statutory income tax withholding were retired. For the year ended December 31, 2024 , 778,167 shares of restricted stock units were issued, and 272,284 shares of common stock related to employee statutory income tax withholding were retired. For the year ended December 31, 2023 , 484,988 shares of restricted stock units were issued, and 159,281 shares of common stock related to employee statutory income tax withholding were retired. The following table presents the number of shares of restricted stock outstanding (at target shares for awards with performance conditions) at December 31, 2025, December 31, 2024 and December 31, 2023: December 31, 2025 December 31, 2024 December 31, 2023 Restricted Stock Units (service condition) 730,329 911,908 1,085,203 Restricted Stock Units (service and performance condition) 860,916 971,110 1,008,133 7. Goodwill The following table summarizes the changes in the carrying value of goodwill by reporting segment for the years ended December 31, 2025 and December 31, 2024 (in thousands): December 31, 2024 Acquisitions Foreign Exchange December 31, 2025 Federal Solutions $ 1,806,564 54,654 - $ 1,861,218 Critical Infrastructure 276,116 46,765 2,551 325,432 Total $ 2,082,680 $ 101,419 $ 2,551 $ 2,186,650 December 31, 2023 Acquisitions Foreign Exchange December 31, 2024 Federal Solutions $ 1,686,901 $ 119,663 $ - $ 1,806,564 Critical Infrastructure 105,764 174,585 ( 4,233 ) 276,116 Total $ 1,792,665 $ 294,248 $ ( 4,233 ) $ 2,082,680 F- 37 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 For the years ended December 31, 2025 and December 31, 2024 , the Company performed a quantitative impairment analysis for all reporting units. It was determined that the fair value of all reporting units exceeded their carrying values. No goodwill impairments were identified for the three years ended December 31, 2025, December 31, 2024 and December 31, 2023 . 8. Intangible Assets The gross amount and accumulated amortization of acquired identifiable intangible assets included in “Intangible assets, net” on the consolidated balance sheets were as follows (in thousands except for years): December 31, 2025 December 31, 2024 Weighted Average Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Amortization Period (in years) Backlog $ 154,470 $ ( 83,181 ) $ 71,289 $ 142,100 $ ( 51,322 ) $ 90,778 4.4 Customer relationships $ 395,460 $ ( 166,391 ) $ 229,069 372,930 ( 139,568 ) 233,362 11.5 Developed technology $ 30,100 $ ( 13,496 ) $ 16,604 23,200 ( 7,458 ) 15,742 4.4 Trade name $ 2,530 $ ( 2,123 ) $ 407 1,500 ( 367 ) 1,133 1.0 Non-compete agreements $ 10,980 $ ( 4,293 ) $ 6,687 8,300 ( 1,203 ) 7,097 3.0 In process research and development $ 1,800 $ - $ 1,800 1,800 - 1,800 n/a Other intangibles $ 24 $ - $ 24 25 - 25 n/a Total intangible assets $ 595,364 $ ( 269,484 ) $ 325,880 $ 549,855 $ ( 199,918 ) $ 349,937 The aggregate amortization expense of intangible assets was $ 69.6 million , $ 55.6 million, and $ 76.6 million for the years ended December 31, 2025, December 31, 2024 and December 31, 2023, respectively. Estimated amortization expense in each of the next five years and beyond is as follows (in thousands): December 31, 2025 2025 $ 65,441 2026 $ 58,480 2027 $ 42,726 2028 $ 26,421 2029 $ 22,702 Thereafter $ 108,309 Total $ 324,079 9. Property and Equipment, Net Property and equipment consisted of the following at December 31, 2025 and December 31, 2024 (in thousands): December 31, 2025 December 31, 2024 Useful life (years) Buildings and leasehold improvements $ 118,945 $ 103,945 1 - 15 Furniture and equipment 88,011 84,720 3 - 10 Computer systems and equipment 181,595 172,437 3 - 10 Construction equipment 15,739 6,463 5 - 7 Construction in progress 51,070 30,342 455,360 397,907 Accumulated depreciation ( 304,299 ) ( 286,332 ) Property and equipment, net $ 151,061 $ 111,575 F- 38 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 Depreciation expense of $ 42.0 million , $ 37.4 million , and $ 39.1 million was recorded for the years ended December 31, 2025, December 31, 2024 and December 31, 2023 , respectively. 10. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following at December 31, 2025 and December 31, 2024 (in thousands): 2025 2024 Salaries and wages $ 133,688 $ 119,122 Employee benefits 351,487 371,435 Self-insurance liability 23,415 17,723 Project cost accruals 280,479 307,200 Other accrued expenses 95,376 78,945 Total accrued expenses and other current liabilities $ 884,445 $ 894,425 11. Debt and Credit Facilities Debt consisted of the following at December 31, 2025 and December 31, 2024 (in thousands): December 31, 2025 December 31, 2024 Short-Term Debt: Delayed draw term loan due 2025 $ - $ 350,000 Convertible senior notes due 2025 - 113,405 Total Short-Term Debt - 463,405 Long-Term Debt: Convertible senior notes due 2029 800,000 800,000 Revolving credit facility - - Term loan due 2028 450,000 - Debt issuance costs ( 12,184 ) ( 15,904 ) Total Long-Term Debt 1,237,816 784,096 Total Debt $ 1,237,816 $ 1,247,501 In June 2025, the Company terminated its $ 350 million Delayed Draw Term Loan due 2025 and its $ 650 million Revolving Credit Facility due 2026 and replaced these credit facilities with a $ 450 million Term Loan due 2028 and a $ 750 million Revolving Credit Facility due 2030. Proceeds from the Term Loan were used to payoff the outstanding balance of the Delayed Draw Term Loan. Term Loan In June 2025 , the Company entered into a $ 450 million unsecured Term Loan with an increase option of up to $ 150 million. Proceeds of the Term Loan Agreement may be used (a) to pay off in full, or partially payoff, the Company’s existing Convertible Senior Notes, (b) to prepay revolving loans outstanding under the Revolving Credit Agreement (as defined below), or (c) for working capital, capital expenditures and other lawful corporate purposes. The Company incurred $ 0.9 million of debt issuance costs in connection with the Term Loan as of December 31, 2025. These costs are presented as a direct deduction from long-term debt on the face of the balance sheet. Interest expense related to the Term Loan was $ 14.0 million for the year ended December 31, 2025, of which $ 0.2 million was related to the F- 39 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 amortization of debt fees. The amortization of debt issuance costs and interest expense is recorded in “Interest expense” on the consolidated statements of income. As of December 31, 2025 there was $ 450 million outstanding under the Term Loan. The Term Loan has a three-year maturity and permits the Company to borrow in U.S. dollars. The Term Loan does not require any amortization payments by the Company. Depending on the Company’s consolidated leverage ratio (or debt rating after such time as the Company has such rating), borrowings under the Term Loan Agreement will bear interest at either an adjusted Term SOFR benchmark rate plus a margin between 0.875 % and 1.500 % or a base rate plus a margin of between 0 % and 0.500 % and will initially bear interest at the middle of this range. Amounts outstanding under the Term Loan Agreement may be prepaid at the option of the Company without premium or penalty, subject to customary breakage fees in connection with the prepayment of benchmark rate loans. The interest rate on December 31, 2025 was 4.8 %. Delayed Draw Term Loan (Terminated June 2025 ) In September 2022 , the Company entered into a $ 350 million unsecured Delayed Draw Term Loan with an increase option of up to $ 150 million (the “2022 Delayed Draw Term Loan”). Proceeds of the 2022 Delayed Draw Term Loan Agreement may be used (a) to pay off in full, or partially payoff, the Company’s existing Senior Notes, (b) to prepay revolving loans outstanding under the Revolving Credit Agreement (as defined below), or (c) for working capital, capital expenditures and other lawful corporate purposes. The Company incurred $ 0.9 million of debt issuance costs in connection with the delayed draw term loan. These costs are presented as a direct deduction from long-term debt on the face of the balance sheet. Interest expense related to the Delayed Draw Term Loan was $ 8.7 million, $ 23.1 million and 22.4 million for the years ended December 31, 2025, December 31, 2024 and December 31, 2023, respectively. Included in these amounts was amortization of debt fees of $ 0.2 million, $ 0.3 million, and $ 0.3 million, respectively. The amortization of debt issuance costs and interest expense is recorded in “Interest expense” on the consolidated statements of income. There was no amount outstanding as of December 31, 2025 and $ 350.0 million outstanding as of December 31, 2024 under the Delayed Draw Term Loan. The 2022 Delayed Draw Term Loan has a three-year maturity and permits the Company to borrow in U.S. dollars. The 2022 Delayed Draw Term Loan does not require any amortization payments by the Company. Depending on the Company’s consolidated leverage ratio (or debt rating after such time as the Company has such rating), borrowings under the 2022 Delayed Draw Term Loan Agreement will bear interest at either an adjusted Term SOFR benchmark rate plus a margin between 0.875 % and 1.500 % or a base rate plus a margin of between 0 % and 0.500 % and will initially bear interest at the middle of this range. The Company will pay a ticking fee on unused term loan commitments at a rate of 0.175 % commencing with the date that is ninety (90) days after the Closing Date. Amounts outstanding under the 2022 Delayed Draw Term Loan Agreement may be prepaid at the option of the Company without premium or penalty, subject to customary breakage fees in connection with the prepayment of benchmark rate loans. The interest rates on June 30, 2025 (loan termination period) and December 31, 2024 were 5.6 % and 5.6 %, respectively. Convertible Senior Notes due 2025 In August 2020, the Company issued an aggregate $ 400.0 million of 0.25 % Convertible Senior Notes due 2025, including the exercise of a $ 50.0 million initial purchasers’ option. The Company received proceeds from the issuance and sale of the Convertible Senior Notes of $ 389.7 million, net of $ 10.3 million of transaction fees and other third-party offering expenses. The Convertible Senior Notes accrue interest at a rate of 0.25 % per annum, payable semi-annually on February 15 and August 15 of each year beginning on February 15, 2021 , and matured on August 15, 2025, unless earlier repurchased, redeemed or converted. The convertible Senior Notes due 2025 matured on August 15, 2025 . The Company recognized interest expense of $ 0.1 million, $ 3.9 million and $ 3.1 million for the years ended December 31, 2025, December 31, 2024 and December 31, 2023, respectively . Included in these F- 40 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 amounts were the amortization of debt fees of $ 3.5 million and $ 2.1 million for the years ended December 31, 2024 and December 31, 2023, respectively. The debt issuance costs were full amortized during the year ended December 31, 2024. There was no amount outstanding as of December 31, 2025 and the net carrying value of the Convertible Senior Notes due 2025 was $ 113.4 million as of December 31, 2024. See the discussion of the partial repurchase of Convertible Senior Notes due 2025 and the unwind of the related note hedge and warrants below. Note Hedge and Warrant - Convertible Senior Notes due 2025 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 price of at least $ 66.46 per 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 Company’s common stock. The net cost of $ 41.2 million for the purchase of the bond hedges and sale of the warrants was recorded as a reduction to additional paid-in capital in the consolidated balance sheets. Convertible Senior Notes due 2029 In February 2024, the Company issued an aggregate $ 800.0 million of 2.625 % Convertible Senior Notes due 2029 (the “2029 Convertible Notes”), including the exercise of a $ 100.0 million initial purchasers’ option in full. The Company received proceeds from the issuance and sale of the 2029 Convertible Notes of $ 781.1 million, net of $ 18.9 million of transaction fees and other third-party offering expenses. The 2029 Convertible Notes accrue interest at a rate of 2.625 % per annum, payable semi-annually on March 1 and September 1 of each year beginning on September 1, 2024 , and will mature on March 1, 2029 , unless earlier repurchased, redeemed or converted. The 2029 Convertible Notes are the 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 2029 Convertible 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, including borrowings under the Company’s revolving credit facility and term loan credit facility, 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 2029 Convertible Notes will initially be convertible into 10.6256 shares of our common stock, which is equivalent to an initial conversion price of approximately $ 94.11 per share, subject to adjustment upon the occurrence of specified events. On or after October 1, 2028 F- 41 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2029 Convertible Notes, holders may convert all or a portion of their 2029 Convertible Notes, regardless of the conditions below. Prior to the close of business on the business day immediately preceding October 1, 2028, the 2029 Convertible Notes will be convertible at the option of the holders thereof only under the following circumstances: • during any calendar quarter commencing after the calendar quarter ending on June 30, 2024, if the last reported sale price of the Company’s common stock for at least 20 trading days, whether or not consecutive, during a period of 30 consecutive trading days ending on, and including the last trading day of the immediately preceding calendar quarter, is greater than or equal to 130 % of the conversion price on each applicable trading day; • during the five business day period after any ten consecutive trading day period in which, for each trading day of that period, the trading price per $ 1,000 principal amount of 2029 Convertible Notes for such trading day was less than 98 % of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; • if the Company calls such 2029 Convertible Notes for redemption; or • upon the occurrence of specified corporate events described in the Indenture. The Company may redeem all or any portion of the 2029 Convertible Notes for cash, at its option, on or after March 8, 2027 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 2029 Convertible Notes to be redeemed, plus 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 2029 Convertible Notes for redemption will constitute a Make-Whole Fundamental Change with respect to that 2029 Convertible Note, in which case the conversion rate applicable to the conversion of that 2029 Convertible Notes 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 2029 Convertible Notes, holders of the 2029 Convertible Notes may require the Company to repurchase all or a portion of the 2029 Convertible Notes for cash at a price equal to 100 % of the principal amount of the 2029 Convertible Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. Upon conversion, the Company will settle the principal amount of the 2029 Convertible Notes converted in cash and will settle the remainder of the consideration owed upon conversion in cash, shares of the Company’s common stock, or a combination thereof, at the Company’s option, with such amount of cash and, if applicable, shares of common stock due upon conversion based on a daily conversion value calculated on a proportionate basis for each trading day in a 50-trading day observation period. The Company recognized interest expense with respect to the Convertible Senior Notes Due 2029 of $ 25.2 million and $ 21.3 million for the years ended December 31, 2025 and December 31, 2024, respectively. Included in these amounts was amortization of debt fees of $ 4.2 million and $ 3.5 million, respectively As of December 31, 2025 and December 31, 2024 , the net carrying value of the Convertible Notes due 2029 were $ 788.5 million and $ 784.3 million, respectively. Capped Call Transactions - Convertible Senior Notes due 2029 F- 42 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 In February 2024, in connection with the offering of the 2029 Convertible Notes, the Company entered into capped call transactions (the “Capped Call Transactions”) with certain financial institutions. The Capped Call Transactions are expected generally to reduce the potential dilution to the Company’s common stock upon any conversion of the Convertible Senior Notes due 2029 and/or offset any cash payments the Company is required to make in excess of the principal amount of any converted Convertible Senior Notes due 2029, as the case may be. If, however, the market price per share of the Company’s common stock, as measured under the terms of the Capped Call Transactions, exceeds the cap price of the Capped Call Transactions, there would nevertheless be dilution and/or there would not be an offset of such cash payments, in each case, to the extent that such market price exceeds the cap price of the Capped Call Transactions. The cap price of the Capped Call Transactions is initially $ 131.7575 per share, which represents a premium of 75 % over the last reported sale price of the Company’s common stock of $ 75.29 per share on the New York Stock Exchange on February 21, 2024, and is subject to certain adjustments under the terms of the Capped Call Transactions. The cost of $ 88.4 million for the Capped Call Transactions was recorded as a reduction to additional paid-in capital in the consolidated balance sheets. At issuance, the Company recorded a deferred tax asset of $ 22.3 million related to the Capped Call Transactions costs through additional paid-in capital. The deferred tax asset was included in Deferred tax assets in the consolidated balance sheets. Convertible Senior Notes due 2025 Partial Repurchase and Note Hedge and Warrants Partial Unwind In connection with the issuance of the Convertible Senior Notes due 2029, during the first quarter of 2024, we used $ 391.8 million of the net proceeds to purchase approximately $ 228.1 million aggregate principal amount of our Convertible Senior Notes due 2025 concurrently with the offering in separate and individually negotiated transactions. In addition, we used $ 103.8 million to settle the repurchase of approximately $ 56.5 million aggregate principal amount of our Convertible Senior Notes due 2025 in a separately negotiated transaction that settled in March 2024. We also received approximately $ 90.6 million in cash from the note hedge counterparties for the partial termination of the existing bond hedge relating to the Convertible Senior Notes due 2025 repurchased, net of our obligations to the counterparties in connection with the partial termination of the related warrant transactions. The tax effect of $ 46.2 million from the partial unwind of the existing bond hedge was recognized as a reduction in additional paid-in capital in the consolidated balance sheets. The income tax payable was included in Income taxes payable in the consolidated balance sheets. The partial repurchase, during the year ended December 31, 2024, resulted in a $ 18.4 million repurchase loss 1 and a $ 3.2 million charge to interest expense for the acceleration of the amortization of debt issuance costs associated with the 0.25 % Convertible Senior Notes due 2025. The tax effect of the repurchase loss, excluding the interest expense, was recognized as a discrete event during the year ended December 31, 2024 with a tax benefit of $ 4.3 million recognized in the income statement. 1 During the first quarter of 2024, prior to the early adoption of ASU 2024-04, the Company recorded a $ 211.0 million loss on debt extinguishment associated with the 0.25 % Convertible Senior Notes due 2025. The tax effect of the debt extinguishment, excluding the interest expense, was recognized as a discrete event to the quarter giving rise to an increase in the effective tax rate and tax benefit of $ 49.9 million recognized in the income statement. Please see "Note 2—Summary of Significant Accounting Policies—New Accounting Pronouncements" for a discussion of the Company's adoption of ASU 2024-04. The extinguishment charge and related income tax impacts were reversed from the Company's consolidated financial statements and recorded as a convertible debt repurchase loss as described above. Revolving Credit Facility due 2030 In June 2025 , the Company entered into a $ 750 million unsecured revolving credit facility (the “Credit Agreement”). The Company incurred $ 1.7 million of costs in connection with this Credit F- 43 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 Agreement. The 2025 Credit Agreement replaced an existing Credit Agreement dated as of June 25, 2021. Under the new agreement, the Company’s revolving credit facility was increased from $ 650 million to $ 750 million. The credit facility has a five-year maturity, which may be extended up to two times for periods determined by the Company and the applicable extending lenders, and permits the Company to borrow in U.S. dollars, certain specified foreign currencies, and each other currency that may be approved in accordance with the 2025 Facility. The borrowings under the Credit Agreement bear interest at either the Term SOFR rate plus a margin between 1.0 % and 1.625 % or a base rate (as defined in the Credit Agreement) plus a margin of between 0 % and 0.625 %. The rate on December 31, 2025 was 5.0 %. Letters of credit commitments outstanding under this agreement aggregated to $ 41.8 million at December 31, 2025 which reduced borrowing limits available to the Company. Interest expense related to the Credit Agreements (due 2030 and due 2026) were $ 0.7 million, $ 0.7 million and $ 3.9 million for the year ended December 31, 2025, December 31, 2024 and December 31, 2023, respectively. Included in these amounts was amortization of debt fees of $ 0.5 million for all years presented. The Credit Agreement includes various covenants, including restrictions on indebtedness, liens, acquisitions, investments or dispositions, payment of dividends and maintenance of certain financial ratios and conditions. The Company was in compliance with these covenants at December 31, 2025 and December 31, 2024. Letters of Credit 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 $ 356.2 million and $ 328.4 million at December 31, 2025 and December 31, 2024 , respectively. 12. Other Long-term Liabilities Other long-term liabilities consisted of the following at December 31, 2025 and December 31, 2024 (in thousands): 2025 2024 Self-insurance liability $ 47,781 $ 58,878 Reserve for uncertain tax positions 23,697 22,985 Finance lease obligations 5,240 6,441 Other long-term liabilities 18,627 8,182 Total other long-term liabilities $ 95,345 $ 96,486 Refer to “Note 13— Income Taxes ” for further discussion of the Company’s reconciliation of the beginning and ending balances of uncertain tax positions. F- 44 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 13. Income Taxes In July 2025, the One Big Beautiful Bill Act (OBBBA) was enacted. Key income tax related provisions of the OBBBA include the repeal of mandatory capitalization of research and development expenditures under Internal Revenue Code (IRC) Section 174 (reinstating full expensing beginning in 2025) and extension of bonus depreciation. The Company recognized the income tax effects of the OBBBA in its 2025 financial statements, including a $ 29 million decrease to both income taxes payable and to current income tax expense, and a $ 29 million increase to deferred tax expense and a $ 29 million decrease to deferred tax assets as of December 31, 2025. The change in the tax law had no significant impact to the Company’s annual effective tax rate. The following table presents the components of our income from operations before income taxes (in thousands): 2025 2024 2023 United States earnings $ 190,867 $ 256,210 $ 179,522 Foreign earnings 191,644 111,441 84,531 $ 382,511 $ 367,651 $ 264,053 The income tax expense (benefit) attributable to income from operations for the years ended December 31, 2025, December 31, 2024, and December 31, 2023 consists of the following (in thousands): 2025 2024 2023 Current Federal $ ( 5,845 ) $ 37,713 $ 37,699 State 10,026 13,441 13,340 Foreign 25,154 19,731 14,013 Total current income tax expense 29,335 70,885 65,052 Deferred Federal 36,923 1,397 ( 5,974 ) State 6,297 3,941 ( 590 ) Foreign 1,092 763 ( 2,350 ) Total deferred tax expense (benefit) 44,312 6,101 ( 8,914 ) Total income tax expense Federal 31,078 39,110 31,725 State 16,323 17,382 12,750 Foreign 26,246 20,494 11,663 Total income tax expense $ 73,647 $ 76,986 $ 56,138 Income tax expense (benefit) was different from the amount computed by applying the United States federal statutory rate to pre-tax income from continuing operations, presented after prospectively adopting ASU 2023-09, as a result of the following (in thousands): F- 45 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 2025 Income before income tax expense $ 382,511 Tax at federal statutory tax rate 80,327 21.0 % State taxes, net of federal tax benefit (1) 11,352 3.0 % Foreign tax effects: Saudi Arabia Withholding taxes 4,993 1.3 % Noncontrolling interests ( 13,965 ) - 3.7 % Other ( 603 ) - 0.2 % Other foreign jurisdictions ( 6,579 ) - 1.7 % Effect of cross-border tax laws: Tax cost of foreign operations, net of credits ( 3,742 ) - 1.0 % Foreign-derived intangible income ( 2,107 ) - 0.5 % Other 62 0.0 % Tax credits: Research and development credit ( 5,727 ) - 1.5 % Other ( 360 ) - 0.1 % Change in valuation allowances 5,984 1.6 % Nontaxable or nondeductible items: Executive compensation 5,051 1.3 % Equity compensation ( 3,596 ) - 0.9 % Other ( 209 ) - 0.1 % Change in unrecognized tax benefits 1,820 0.5 % Other adjustments 946 0.3 % Total income tax expense $ 73,647 19.3 % (1) The states and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include California, Virginia, Maryland, Texas, and Florida. Income tax expense (benefit) was different from the amount computed by applying the United States federal statutory rate to pre-tax income from continuing operations, prior to adopting ASU 2023-09, as a result of the following (in thousands): 2024 2023 Income before income tax expense $ 367,651 $ 264,053 Tax at federal statutory tax rate 77,207 21.0 % 55,451 21.0 % State taxes, net of federal tax benefit 11,852 3.2 % 9,807 3.7 % Change in valuation allowance 11,111 3.0 % 5,773 2.2 % Change in uncertain tax positions 3,584 1.0 % 3,530 1.3 % Foreign tax rate differential ( 6,078 ) - 1.7 % ( 6,258 ) - 2.4 % Tax cost of foreign operations, net of credits 1,842 0.5 % 3,085 1.2 % Foreign-derived intangible income deduction ( 14,794 ) - 4.0 % ( 4,736 ) - 1.8 % Noncontrolling interests ( 11,679 ) - 3.2 % ( 9,821 ) - 3.7 % Federal business credits ( 2,932 ) - 0.8 % ( 2,731 ) - 1.0 % Executive compensation 7,351 2.0 % 1,636 0.6 % Equity compensation ( 7,170 ) - 2.0 % ( 158 ) - 0.1 % Other, net 6,692 1.8 % 560 0.2 % Total income tax expense $ 76,986 20.9 % $ 56,138 21.3 % The effective tax rate in 2025 decreased to 19.3 % from 20.9 % in 2024. The change in the effective tax rate was due primarily to a change in the jurisdictional mix of earnings, decreases in the change of valuation allowance on NOLs and non-deductible executive compensation subject to Section 162(m), an increase in untaxed income attributable to noncontrolling interests, and an increase in business tax F- 46 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 credits, partially offset by decreases in foreign-derived intangible income (FDII) deduction and the windfall equity-based compensation deduction. The effective tax rate in 2024 decreased to 20.9 % from 21.3 % in 2023. The change in the effective tax rate was due primarily to tax benefits related to increases in the foreign-derived intangible income (FDII) deduction and increased equity-based compensation deductions, partially offset by an increase in valuation allowance on NOLs and non-deductible executive compensation subject to Section 162(m). The components of deferred tax assets and liabilities consist of the following at December 31, 2025 and December 31, 2024 (in thousands): 2025 2024 Deferred tax assets Project and non-project reserves $ 18,276 $ 23,184 Employee compensation and benefits 76,977 76,944 Revenue and cost recognition 33,345 46,250 Insurance accruals 10,448 12,424 Net operating losses 15,107 17,640 Lease liabilities 34,777 42,572 Tax credit carryforwards 43,067 35,845 Other 11,048 17,432 Total deferred tax assets 243,045 272,291 Valuation allowance ( 50,558 ) ( 45,318 ) Total deferred tax assets 192,487 226,973 Deferred tax liabilities Intangible assets ( 71,648 ) ( 57,361 ) Right-of-use assets ( 31,464 ) ( 38,605 ) Profit remittance tax ( 7,810 ) ( 6,842 ) Other ( 5,533 ) ( 1,758 ) Total deferred tax liabilities ( 116,455 ) ( 104,566 ) Net deferred tax asset $ 76,032 $ 122,407 The Company is not asserting that any of the earnings of the foreign subsidiaries will be permanently reinvested. Therefore, the Company has recorded a deferred tax liability for the undistributed earnings net of applicable foreign tax credits. The Company assesses the realizability of its deferred tax assets each reporting period through an analysis of potential sources of taxable income, including prior year taxable income available to absorb carryback of tax losses, reversals of existing taxable temporary differences, tax planning strategies, and forecasts of taxable income. The Company considers all negative and positive evidence, including the weight of the evidence, to determine if a valuation allowance against deferred tax assets is required. A valuation allowance is recorded against deferred tax assets to reflect the amount of deferred tax assets that is determined to be more-likely-than-not to be realized. As of December 31, 2025, and December 31, 2024, the Company’s valuation allowance against deferred tax assets was $ 50.6 million and $ 45.3 million, respectively. The Company has recorded a valuation allowance against certain tax attributes that the Company has determined are not more-likely-than-not to be realized, including certain foreign net operating loss carryforwards, foreign tax credit carryforwards, and capital loss carryforwards. From December 31, 2024 to December 31, 2025, the Company’s valuation allowance increased by $ 5.3 million. This increase relates to deferred tax assets recorded for net operating loss carryforwards and foreign tax credit carryforwards. The valuation allowance is recorded because the Company does not expect to utilize the carryforward amounts before they expire. F- 47 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 As of December 31, 2025, the Company has Net Operating Losses ("NOLs") of $ 2.0 million, $ 43.7 million, and $ 59.6 million for U.S. Federal, U.S. states and foreign jurisdictions, respectively. The utilization of the U.S. federal and U.S. state NOLs are subject to certain annual limitations. Of these NOL amounts, $ 2.0 million, $ 17.9 million and $ 25.1 million in U.S. Federal, U.S. states and foreign jurisdictions, respectively, do not expire. The remaining amounts of NOLs in U.S. states and in foreign jurisdictions will expire if not used between 2026 and 2046 . As of December 31, 2025, the Company has foreign tax credit carryforwards of $ 39.0 million. The Company has provided a valuation allowance of $ 39.0 million as the Company considers it is not more likely than not that these credits will be realized. These foreign tax credits start expiring in the year 2029 . A reconciliation of the beginning and ending balances of unrecognized tax benefits is as follows (in thousands): 2025 2024 2023 Beginning of year $ 29,538 $ 25,497 $ 22,798 Increases—current year tax positions 7,548 1,058 3,220 Increases—prior year tax positions 2,436 7,488 2,458 Decreases—prior year tax positions ( 1,458 ) ( 1,826 ) ( 1,589 ) Settlements — ( 1,334 ) ( 1,026 ) Lapse of statute of limitations ( 5,710 ) ( 1,345 ) ( 364 ) End of year $ 32,354 $ 29,538 $ 25,497 At December 31, 2025, and December 31, 2024, there are $ 26.5 million and $ 28.6 million of unrecognized tax benefits that if recognized would affect the Company’s effective tax rate. The Company recognizes interest and penalties related to unrecognized tax benefits as part of its income tax expense. During the years ended December 31, 2025, December 31, 2024, and December 31, 2023, the Company recognized approximately $ 0.7 million, $ 1.0 million, and $ 0.5 million in interest and penalties, respectively, in the consolidated statements of income. The total amount of interest and penalties accrued in the consolidated balance sheets was $ 6.3 million, $ 5.6 million, and $ 4.6 million as of December 31, 2025, December 31, 2024, and December 31, 2023, respectively. The Company conducts business globally and, as a result, the Company or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction, various U.S. states, and foreign jurisdictions. The Company is subject to examination by tax authorities in several jurisdictions, including jurisdictions where the Company has significant activities, such as Canada, Saudi Arabia, the United Arab Emirates and the United States. As of December 31, 2025, the Company’s U.S. federal income tax returns for tax years 2022 and forward remain subject to examination. U.S. states and foreign income tax returns remain subject to examination based on varying local statutes of limitations. Although the Company believes its reserves for its tax positions are reasonable, the final outcome of tax audits could be significantly different, both favorably and unfavorably. The amounts of cash income taxes paid (net of refunds received) by the Company were as follows (in thousands): F- 48 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 2025 Federal $ ( 13 ) State and local: California 1,730 All other state and local 8,212 Foreign: Saudi Arabia 17,018 All other foreign 3,847 Total income taxes paid, net of refunds received $ 30,794 The amount of cash income taxes paid (net of refunds received) by the Company during the year ended December 31, 2024 and 2023 was $ 59.8 million and $ 74.1 million, respectively. The change in tax law from OBBBA led to the reduction of 2025 income taxes paid. 14. Contingencies The Company is subject to certain lawsuits, claims and assessments that arise in the ordinary course of business. Additionally, the Company has been named as a defendant in lawsuits alleging personal injuries as a result of contact with asbestos products at various project sites. Management believes that any significant costs relating to these claims will be reimbursed by applicable insurance and, although there can be no assurance that these matters will be resolved favorably, management believes that the ultimate resolution of any of these claims will not have a material adverse effect on our consolidated financial position, results of operations, or cash flows. A liability is recorded when it is both probable that a loss has been incurred and the amount of loss or range of loss can be reasonably estimated. When using a range of loss estimate, the Company records the liability using the low end of the range unless some amount within the range of loss appears at that time to be a better estimate than any other amount in the range. The Company records a corresponding receivable for costs covered under its insurance policies. Management judgment is required to determine the outcome and the estimated amount of a loss related to such matters. Management believes that there are no claims or assessments outstanding which would materially affect the consolidated results of operations or the Company’s financial position. 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 plaintiff alleges that, as a result of these actions, the United States paid in excess of $ 1 million per month between February and September 2006 that it should have paid to another contractor, plus $ 2.9 million to acquire vehicles for the contractor defendant to perform its security services. The lawsuit sought (i) that we cease and desist from violating the False Claims Act, (ii) monetary damages equal to three times the amount of damages that the United States has sustained because of our alleged violations, plus a civil penalty of not less than $ 5,500 and not more than $ 11,000 for each alleged violation of the False Claims Act, (iii) monetary damages equal to the maximum amount allowed pursuant to §3730(d) of the False Claims Act, and (iv) Relator’s costs for this action, including recovery of attorneys’ fees and costs incurred in the lawsuit. The United States government did not intervene in this matter as it is allowed to do so under the statute. The court heard dispositive motions in 2023, including Parsons’ motion for summary judgment. In March 2025, the court granted Parsons’ motion for summary judgment. The Relator has appealed this decision. We anticipate that oral argument will be heard by the appellate court in 2026. On July 1, 2024, a final judgment was filed with the clerk of the Superior Court of the State of California In and For the County of San Mateo with an award of damages in the total amount of approximately $ 102.5 million in favor of Parsons Transportation Group, Inc. and against Alstom Signaling Operations LLC (Alstom"). This proposed award relates back to a lawsuit Parsons initially filed against the Peninsula Corridor Joint Powers Board for breach of contract and wrongful termination in February 2017 F- 49 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 (which was settled between Parsons and the Joint Powers Board in 2021) and a cross-complaint filed against Alstom Signaling Operations LLC in November 2017, as subsequently amended, for breach of contract, negligence and intentional misrepresentation. On September 23, 2024, the Court awarded pre-judgment interest in the amount of $ 34.0 million and amended the judgment accordingly to include such interest. Alstom filed a Notice of Appeal and has posted a bond as required under California law. The appellate briefs have been filed with Parsons having until February 2026 to file their final brief. We anticipate oral argument will occur in 2026. At this time, the Company is unable to determine the probability of the outcome of the litigation. 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 Federal Acquisition Regulations (“FAR”). If the DCAA determines we have not accounted for such costs in accordance with the FAR, 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 2023 have been closed, and years thereafter remain open. All of Parsons operating systems have been deemed adequate by the U.S. federal government. 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. 15. Retirement and Other Benefit Plans The Company’s principal retirement benefit plan is the ESOP, a stock bonus plan, established in 1975 to cover eligible employees of the Company and certain affiliated companies. Contributions of treasury stock to 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 three years of credited service, or in the event(s) of reaching age 65, death or disability while an active employee of the Company. As of December 31, 2025, the total shares of the Company’s common stock outstanding were 106,968,082 , of which 50,864,117 were held by the ESOP. As of December 31, 2024 , the total shares of the Company’s common stock outstanding were 106,775,350 of which 54,117,903 were held by the ESOP. A participant’s interest in their ESOP 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. Distributions from the ESOP of participants’ interests are made in the Company’s common stock based on quoted prices of a share of the Company’s common stock on the NYSE. A participant will be able to sell such shares of common stock in the market, subject to any requirements of the federal securities laws. Total ESOP contribution expense was approximately $ 72.5 million, $ 59.8 million and $ 58.2 million for the years ended December 31, 2025, December 31, 2024 and December 31, 2023, respectively, and is recorded in “Direct costs of contracts” and “Selling, general and administrative expense” in the consolidated statements of income. 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 contributions to the 401(k) Plan for the years ended December 31, 2025, F- 50 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 December 31, 2024 and December 31, 2023 amounted to $ 45.8 million, $ 37.7 million, and $ 35.4 million, respectively. 16. Investments in and Advances to Joint Ventures The Company participates in joint ventures to bid, negotiate and complete specific projects. The Company is required to consolidate these joint ventures if it holds the majority voting interest or if the Company meets the criteria under the consolidation model, as described below. The Company performs an analysis to determine whether its variable interests give the Company a controlling financial interest in a VIE for which the Company is the primary beneficiary and should, therefore, be consolidated. Such analysis requires the Company to assess whether it has the power to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The Company analyzed all of its joint ventures and classified them into two groups: (1) joint ventures that must be consolidated because they are either not VIEs and the Company holds the majority voting interest, or because they are VIEs and the Company is the primary beneficiary; and (2) joint ventures that do not need to be consolidated because they are either not VIEs and the Company holds a minority voting interest, or because they are VIEs and the Company is not the primary beneficiary. Many of the Company’s joint venture agreements provide for capital calls to fund operations, as necessary; however, such funding is infrequent and is not anticipated to be material. Letters of credit outstanding described in ‘Note 11— Debt and Credit Facilities ” that relate to project ventures are approximately $ 184.4 million and $ 176.7 million at December 31, 2025 and December 31, 2024, respectively. In the table below, aggregated financial information relating to the Company’s joint ventures is provided because their nature, risk and reward characteristics are similar. None of the Company’s current joint ventures that meet the characteristics of a VIE are individually significant to the consolidated financial statements. Consolidated Joint Ventures The following represents financial information for consolidated joint ventures included in the consolidated financial statements as of and for the years ended December 31, 2025, December 31, 2024 and December 31, 2023 (in thousands): 2025 2024 Current assets $ 542,877 $ 519,450 Noncurrent assets 7,961 9,841 Total assets 550,838 529,291 Current liabilities 301,891 296,774 Noncurrent Liabilities 3,417 2,203 Total liabilities 305,308 298,977 Total joint venture equity $ 245,530 $ 230,314 2025 2024 2023 Revenue $ 819,562 $ 788,702 $ 708,391 Costs 683,298 676,258 613,186 Net income $ 136,264 $ 112,444 $ 95,205 Net income attributable to noncontrolling interests $ 67,725 $ 55,612 $ 46,766 F- 51 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 The assets of the consolidated joint ventures are restricted for use only by the particular joint venture and are not available for the Company’s general operations. Unconsolidated Joint Ventures The Company accounts for its unconsolidated joint ventures using the equity method of accounting. Under this method, the Company recognizes its proportionate share of the net earnings of these joint ventures as “Equity in earnings (loss) of unconsolidated joint ventures” in the consolidated statements of income. The Company’s maximum exposure to loss as a result of its investments in unconsolidated VIEs is typically limited to the aggregate of the carrying value of the investment and future funding commitments. The following represents the financial information of the Company’s unconsolidated joint ventures as presented in their unaudited financial statements as of and for the years ended December 31, 2025, December 31, 2024 and December 31, 2023 (in thousands): 2025 2024 Current assets $ 1,549,367 $ 1,477,950 Noncurrent assets 439,496 431,476 Total assets 1,988,863 1,909,426 Current liabilities 1,046,970 947,072 Noncurrent liabilities 469,833 469,808 Total liabilities 1,516,803 1,416,880 Total joint venture equity $ 472,060 $ 492,546 Investments in and advances to unconsolidated joint ventures $ 148,640 $ 138,759 2025 2024 2023 Revenue $ 2,140,784 $ 2,118,799 $ 2,313,420 Costs 2,042,084 2,108,768 2,310,114 Net income $ 98,700 $ 10,031 $ 3,306 Equity in earnings of unconsolidated joint ventures $ 2,583 $ ( 23,361 ) $ ( 47,751 ) The Company had net contributions to its unconsolidated joint ventures of $ 2.1 million , $ 38.8 million , and $ 65.2 million for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively. The following table presents certain financial statement impacts from changes in estimates on unconsolidated joint ventures in the Critical Infrastructure segment. 2025 2024 2023 Operating loss $ ( 29,140 ) $ ( 51,715 ) $ ( 83,398 ) Net loss ( 21,734 ) ( 44,682 ) ( 61,842 ) Diluted loss per share $ ( 0.20 ) $ ( 0.40 ) $ ( 0.54 ) 17. Related Party Transactions The Company often provides services to unconsolidated joint ventures and revenues include amounts related to recovering overhead costs for these services. For the years ended December 31, 2025, December 31, 2024 and December 31, 2023, revenues included $ 194.7 million , $ 182.6 million , and $ 213.8 million, respectively, related to services the Company provided to unconsolidated joint ventures. F- 52 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 For the years ended December 31, 2025, December 31, 2024 and December 31, 2023, the Company incurred approximately $ 137.5 million , $ 143.2 million , and $ 153.7 million, respectively, of reimbursable costs. Amounts included in the consolidated balance sheets related to services the Company provided to unconsolidated joint ventures are as follows (in thousands): 2025 2024 Accounts receivable $ 45,116 $ 38,443 Contract assets 29,283 11,540 Contract liabilities 7,297 10,776 Amounts presented above for comparable periods have been updated to reflect all unconsolidated joint ventures. 18. Fair Value The authoritative guidance on fair value measurement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (referred to as an “exit price”). At December 31, 2025 and December 31, 2024 the Company’s financial instruments include cash, cash equivalents, accounts receivable, accounts payable, and other liabilities. The fair values of these financial instruments approximate their carrying values due to their short-term maturities. Investments measured at fair value are based on one or more of the following three valuation techniques: • Market approach —Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities; • Cost approach —Amount that would be required to replace the service capacity of an asset (i.e., replacement cost); and • Income approach —Techniques to convert future amounts to a single present amount based on market expectations (including present value techniques, option-pricing models and lattice models). In addition, the guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities; Level 2 Pricing inputs that include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the derivative instrument; and Level 3 Prices or valuations that require inputs that are both significant to the fair value measurements and unobservable. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. In determining the fair value of acquired intangible assets from our business acquisitions, the Company uses the multi-period excess earnings method to value customer relationships and backlog and values developed technologies using the relief-from royalty method. These valuation methods use F- 53 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 significant unobservable inputs classified within Level 3 of the fair value hierarchy. See "Note 2— Summary of Significant Accounting Policies." We measure contingent consideration at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy. See "Note 2— Summary of Significant Accounting Policies" and "Note 3— Acquisitions" for further information. With respect to equity-based compensation, for restricted stock units containing service conditions or service and performance conditions, the grant date fair value is based on the closing stock price of a share of the Company’s common stock on the NYSE on the grant date. For awards that include market conditions, the grant date fair value is determined using a Monte Carlo simulation. The carrying values and estimated fair values of our financial instruments that are not required to be recorded at fair value in our consolidated balance sheets, on the basis of Level 1 inputs for the Company's convertible notes and Level 2 inputs for the term loan, were as follows (in thousands): December 31, 2025 December 31, 2024 Carrying Value Fair Value Carrying Value Fair Value Liabilities: Convertible senior notes due 2025 $ - $ - $ 113,405 $ 233,206 Convertible senior notes due 2029 800,000 825,680 800,000 939,280 Term loan due 2028 450,000 450,000 - - Delayed draw term loan due 2025 - - 350,000 350,000 Total $ 1,250,000 $ 1,275,680 $ 1,263,405 $ 1,522,486 19. Earnings Per Share Basic earnings per share (“EPS”) is computed using the weighted average number of shares outstanding during the period and income available to shareholders. Diluted EPS includes additional common shares that would have been outstanding if potential common shares with a dilutive effect had been issued using the if-converted method for Convertible Debt and the treasury stock method for all other instruments. Under the treasury stock method, the weighted average number of shares outstanding is adjusted to reflect the dilutive effects of stock-based awards and shares underlying the warrants related to the convertible senior notes due 2025. Under the if-converted method: 1. Convertible Senior Notes due 2025: a. Income available to shareholders is adjusted to add back interest expense, after tax (unless antidilutive). b. Weighted average number of shares outstanding is adjusted to include the shares underlying the convertible debt (unless antidilutive). c. Shares underlying the bond hedge (unless antidilutive). 2. Convertible Senior Notes due 2029: a. Interest has been excluded from the numerator and no shares have been included in the denominator of diluted EPS, as the principal amount of convertible debt will be settled in cash with any excess conversion value settled in cash or shares of common stock. F- 54 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 b. Excludes shares underlying the capped call as the shares are antidilutive. The following table reconciles the numerator and denominator used to compute basic and diluted EPS for the years ended December 31, 2025, December 31, 2024, and December 31, 2023 (in thousands): 2025 2024 2023 Numerator for Basic and Diluted EPS: Net income attributable to Parsons Corporation - basic $ 241,139 $ 235,053 $ 161,149 Convertible senior notes if-converted method interest adjustment 135 2,932 2,291 Net income attributable to Parsons Corporation - diluted $ 241,274 $ 237,985 $ 163,440 Denominator for Basic and Diluted EPS: Basic weighted average number of shares outstanding 106,828 106,274 104,992 Dilutive effect of stock-based awards 1,418 1,778 1,173 Dilutive effect of warrants 286 494 — Dilutive effect of convertible senior notes 1,161 3,628 8,917 Diluted weighted average number of shares outstanding 109,693 112,174 115,082 Earnings per share: Basic $ 2.26 $ 2.21 $ 1.53 Diluted $ 2.20 $ 2.12 $ 1.42 Anti-dilutive stock-based awards excluded from the calculation of earnings per share for the years ended December 31, 2025, December 31, 2024, and December 31, 2023 were 14,571 , 4,562 , and 5,423 , respectively. Share Repurchases On August 9, 2021, the Company’s Board of Directors authorized the Company to acquire a number of shares of Common Stock having an aggregate market value of not greater than $ 100 million from time to time, commencing on August 12, 2021 . The Board further amended this authorization in August 2022 to remove the prior expiration date and grant executive leadership the discretion to determine the price for such share repurchases. The Board further amended this authorization in March 2025 to increase and reset the repurchase capacity to $ 250 million. Any purchases made by the Company during Q1 of 2025 were deducted from the reset capacity. Under prior authorizations, the Company had repurchased shares with an aggregate market value of $ 79.7 million. The aggregate market value of shares of Common Stock the Company is authorized to acquire from prior authorizations and the March 2025 authorization is not greater than $ 329.7 million. As of December 31, 2025 , the Company has $ 125.0 million remaining under the stock repurchase program. Repurchased shares of common stock are retired and included in “Repurchases of common stock” in cash flows from financing activities in the Consolidated Statements of Cash Flows. The primary purpose of the Company’s share repurchase program is to reduce the dilutive effect of shares issued under the Company’s ESOP and other stock benefit plans. The timing, amount and manner of share repurchases may depend upon market conditions and economic circumstances, availability of investment F- 55 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 opportunities, the availability and costs of financing, the market price of the Company's common stock, other uses of capital and other factors. The following table summarizes the repurchase activity under the stock repurchase program. 2025 2024 Total shares repurchased 1,822,368 287,005 Total shares retired 1,822,368 287,005 Average price paid per share $ 68.59 $ 87.10 20. Segments Information The Company operates in two reportable segments: Federal Solutions and Critical Infrastructure. The Federal Solutions segment provides advanced technical solutions to the U.S. government, delivering timely, cost-effective hardware, software and services for mission-critical projects. The segment provides advanced technologies, supporting national security missions in cyber operations, missile defense, and military facility modernization, logistics support, hazardous material remediation and engineering services. The Critical Infrastructure segment provides integrated engineering and management services for complex physical and digital infrastructure around the globe. The Critical Infrastructure segment is a technology innovator focused on next generation digital systems and complex structures. Industry leading capabilities in engineering and project management allow the Company to deliver significant value to customers by employing cutting-edge technologies, improving timelines and reducing costs. The Company defines its reportable segments based on the way the chief operating decision maker (“CODM”), its 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, segment direct cost of contracts, segment Selling, General and Administrative expense and segment Adjusted EBITDA attributable to Parsons Corporation. The Company defines Adjusted EBITDA attributable to Parsons Corporation as Adjusted EBITDA excluding Adjusted EBITDA attributable to noncontrolling interests. The Company defines Adjusted EBITDA as net income (loss) attributable to Parsons Corporation, adjusted to include net income (loss) attributable to noncontrolling interests and to exclude interest expense (net of interest income), provision for income taxes, depreciation and amortization and certain other items that are not considered in the evaluation of ongoing operating performance. These other items include net income (loss) attributable to noncontrolling interests, asset impairment charges, income and expense recognized on litigation matters, expenses incurred in connection with acquisitions and other non-recurring transaction costs and expenses related to our prior restructuring. Adjusted EBITDA is the measure of our operating performance used by the CODM to assess our segments’ financial performance. The CODM uses Adjusted EBITDA for business planning purposes, including to manage our segments against internal projected results of operations and measure the performance of our segments generally . F- 56 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 The following tables present segment information provided to the CODM, as of each fiscal year presented, along with a reconciliation of segment adjusted EBITDA attributable to Parsons Corporation to net income attributable to Parsons Corporation for the periods presented (in thousands): Year Ended December 31, 2025 Federal Solutions Critical Infrastructure Total Revenue $ 3,220,797 $ 3,143,448 $ 6,364,245 Direct cost of contracts ( 2,530,560 ) ( 2,402,151 ) ( 4,932,711 ) Selling, general and administrative expenses (a) ( 179,032 ) ( 186,893 ) ( 365,925 ) Equity in earnings (losses) of unconsolidated joint ventures 4,107 ( 1,524 ) 2,583 Other segment items (b) ( 234,196 ) ( 292,774 ) ( 526,970 ) Adjusted EBITDA attributable to Parsons Corporation $ 281,116 $ 260,106 541,222 Reconciliation: Segment Adjusted EBITDA to Net Income Attributable to Parsons Corporation Adjusted EBITDA attributable to non-controlling interests 68,084 Depreciation and amortization ( 116,486 ) Interest expense, net ( 44,424 ) Income tax expense ( 73,647 ) Equity-based compensation expense ( 40,225 ) Transaction related costs (c) ( 18,205 ) Restructuring expense (d) ( 2,653 ) Other (e) ( 4,802 ) Net income including noncontrolling interests 308,864 Net income attributable to noncontrolling interests ( 67,725 ) Net income attributable to Parsons Corporation $ 241,139 F- 57 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 Year Ended December 31, 2024 Federal Solutions Critical Infrastructure Total Revenue $ 4,007,114 $ 2,743,462 $ 6,750,576 Direct cost of contracts ( 3,187,829 ) ( 2,156,325 ) ( 5,344,154 ) Selling, general and administrative expenses (a) ( 157,442 ) ( 146,744 ) ( 304,186 ) Equity in earnings (losses) of unconsolidated joint ventures 3,254 ( 26,615 ) ( 23,361 ) Other segment items (b) ( 249,759 ) ( 280,877 ) ( 530,636 ) Adjusted EBITDA attributable to Parsons Corporation $ 415,338 $ 132,901 548,239 Reconciliation: Segment Adjusted EBITDA to Net Income Attributable to Parsons Corporation Adjusted EBITDA attributable to non-controlling interests 56,714 Depreciation and amortization ( 99,251 ) Interest expense, net ( 40,154 ) Income tax expense ( 76,986 ) Equity-based compensation expense ( 61,492 ) Convertible debt repurchase loss ( 18,355 ) Transaction related costs (c) ( 17,138 ) Other (e) ( 912 ) Net income including noncontrolling interests 290,665 Net income attributable to noncontrolling interests ( 55,612 ) Net income attributable to Parsons Corporation $ 235,053 F- 58 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 Year Ended December 31, 2023 Federal Solutions Critical Infrastructure Total Revenue $ 3,020,701 $ 2,422,048 $ 5,442,749 Direct cost of contracts ( 2,375,350 ) ( 1,861,385 ) ( 4,236,735 ) Selling, general and administrative expenses (a) ( 129,507 ) ( 129,747 ) ( 259,254 ) Equity in earnings (losses) of unconsolidated joint ventures 4,190 ( 51,941 ) ( 47,751 ) Other segment items (b) ( 230,784 ) ( 251,190 ) ( 481,974 ) Adjusted EBITDA attributable to Parsons Corporation $ 289,250 $ 127,785 417,035 Reconciliation: Segment Adjusted EBITDA to Net Income Attributable to Parsons Corporation Adjusted EBITDA attributable to non-controlling interests 47,638 Depreciation and amortization ( 119,973 ) Interest expense, net ( 29,306 ) Income tax expense ( 56,138 ) Equity-based compensation expense ( 36,151 ) Transaction related costs (c) ( 12,013 ) Restructuring expense (d) ( 1,244 ) Other (e) ( 1,933 ) Net income including noncontrolling interests 207,915 Net income attributable to noncontrolling interests ( 46,766 ) Net income attributable to Parsons Corporation $ 161,149 (a) The amount of selling, general and administrative expenses (“SG&A”) is total SG&A excluding allocations. (b) The amount of other segment items is the difference between segment revenue less direct cost of contracts, segment SG&A expenses, equity in earnings (losses) of unconsolidated joint ventures, and Adjusted EBITDA attributable to Parsons Corporation. Other segment items primarily include: i. Corporate and shared segment SG&A (excluding Adjusted EBITDA items) ii. Noncontrolling interests attributable to operating income and other income/expense iii. Bad debt expense iv. Sublease income v. Foreign currency gain/loss, and vi. Certain other income/expense items (c) Reflects costs incurred in connection with acquisitions, and other non-recurring transaction costs, primarily fees paid for professional services and employee retention. (d) Reflects costs associated with and related to our corporate restructuring initiatives. (e) Includes a combination of gain/loss related to sale of fixed assets, software implementation costs, and other individually insignificant items that are non-recurring in nature. F- 59 PARSONS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, December 31, 2024 and December 31, 2023 Asset information by segment is not a key measure of performance used by the CODM. The following table presents revenues and property and equipment, net by geographic area (in thousands): 2025 2024 2023 Revenues: North America $ 5,182,232 $ 5,677,933 $ 4,481,492 Middle East 1,162,213 1,052,509 943,175 Rest of World 19,800 20,134 18,082 Total revenues $ 6,364,245 $ 6,750,576 $ 5,442,749 Property and equipment, net North America $ 137,894 $ 101,044 $ 91,766 Middle East 13,167 10,531 7,191 Total property and equipment, net $ 151,061 $ 111,575 $ 98,957 North America revenue includes $ 4.7 billion, $ 5.2 billion and $ 4.1 billion of United States revenue for the years ended December 31, 2025, December 31, 2024 and December 31, 2023 , respectively. North America property and equipment, net includes $ 130.5 million, $ 94.0 million and $ 83.9 million of property and equipment, net in the United States at December 31, 2025, December 31, 2024 and December 31, 2023, respectively. The geographic location of revenue is determined by the location of the customer. The following table presents revenues by business lines (in thousands): 2025 2024 2023 Revenue: Defense & Intelligence $ 1,872,635 $ 1,772,481 $ 1,539,968 Engineered Systems 1,348,162 2,234,633 1,480,733 Federal Solutions revenues 3,220,797 4,007,114 3,020,701 Infrastructure – North America 1,973,356 1,683,664 1,472,768 Infrastructure – Europe, Middle East and Africa 1,170,092 1,059,798 949,280 Critical Infrastructure revenues 3,143,448 2,743,462 2,422,048 Total revenues $ 6,364,245 $ 6,750,576 $ 5,442,749 Effective October 1, 2023, the Company reorganized its Critical Infrastructure business units from Mobility Solutions and Connected Communities to Infrastructure – North America and Infrastructure – Europe, Middle East and Africa. The 2023 information in the table above has been reclassified to conform to the business unit changes. 21. Subsequent Events After the year ended December 31, 2025, the Company entered into a merger agreement to acquire a 100 % ownership interest in Altamira Technologies Corporation ("ATC") for approximately $ 340 million. Headquartered in McLean, Virginia ATC specializes in missile warning, AI/ML-enabled analytics, space-based mission support, and SIGINT/cyber operations. At the time of the filing of this Form 10-K, the Company has just started the process of obtaining the relevant data to make the required acquisition related disclosures. F- 60 PARSONS CORPORATION AND SUBSIDIARIES Schedule II—Valuation and Qualifying Accounts (in thousands) Balance at beginning of period Additions Deductions Other and foreign exchange impact Balance at end of period 2025 Allowance for doubtful accounts $ 3,886 $ - $ - $ - $ 3,886 Valuation allowance on deferred tax assets 45,318 6,850 ( 2,343 ) 733 50,558 2024 Allowance for doubtful accounts 3,952 $ - $ ( 66 ) $ - 3,886 Valuation allowance on deferred tax assets 34,779 11,452 ( 328 ) ( 585 ) 45,318 2023 Allowance for doubtful accounts 4,011 - ( 59 ) - 3,952 Valuation allowance on deferred tax assets $ 28,705 8,209 ( 2,437 ) 302 $ 34,779 F- 61