12 unchanged sentences
We continue to see several potential contract awards pushed out to a future date.
−Removed: The Company is receiving limited benefits associated with the CARES Act related to its work on certain US national security projects;
−Removed: however, the curtailment of work under these projects and the CARES Act benefits are not likely to have a material impact on our financial condition or results of operations.
−Removed: The reimbursement period for Section 3610 of the CARES Act extends until March 31, 2021.
+Added: The Company received limited benefits associated with the CARES Act related to its work on certain US national security projects;
+Added: however, the curtailment of work under these projects and the CARES Act benefits did not have a material impact on our financial condition or results of operations.
+Added: The reimbursement period for Section 3610 of the CARES Act expired September 30, 2021.
The Company has provided additional disclosure around liquidity and capital resources which can be found in the “Liquidity and Capital Resources” section in Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-K.
3 unchanged sentences
PARSONS CORPORATION Enabling a safer, smarter, and more interconnected world.
−Removed: Federal Solutions Technology-driven solutions for defense and intelligence customers SEGMENTS Critical Infrastructure Engineered solutions for complex physical and digital infrastructure challenges FINANCIAL SNAPSHOT $4B FY 2019 Revenue Critical Infrastructure52% Federal Solutions48% $4.3BFY 2019 Contract Awards Critical Infrastructure41% Federal Solutions59% KEY FACTS AND FIGURES 75Years of History ~ 16KEmployees 11%Revenue Growth (FY 2019) 1.1XTTM Book-to-Bill $8.0BBacklog as of 12/31/2019
−Removed: We are a leading innovative technology provider in the global defense, intelligence and critical infrastructure markets.
−Removed: We provide software and hardware products, technical services and integrated solutions to support our customers’ missions.
−Removed: We have developed significant expertise and differentiated capabilities in key areas of cybersecurity, intelligence, missile defense, C5ISR, space, geospatial, and connected communities.
−Removed: By combining our talented team of professionals and advanced technology, we help solve complex technical challenges to enable a safer, smarter and more interconnected world.
+Added: Federal Solutions Technology-driven solutions for defense and intelligence customers SEGMENTS Critical Infrastructure Engineered solutions for complex physical and digital infrastructure challenges FINANCIAL SNAPSHOT $4B FY 2019 Revenue Critical Infrastructure52% Federal Solutions48% $4.3BFY 2019 Contract Awards Critical Infrastructure41% Federal Solutions59% KEY FACTS AND FIGURES 75Years of History ~ 16KEmployees 11%Reven ue Growth (FY 2019) 1.1XTTM Book-to-Bill $8.0BBacklog as of 12/31/2019
+Added: We are a leading provider of the integrated solutions and services required in today’s complex security environment and a world of digital transformation.
+Added: We deliver innovative technology-driven solutions to customers worldwide.
+Added: We have developed significant expertise and differentiated capabilities in key areas of cybersecurity, intelligence, missile defense, C5ISR, space, transportation, water/wastewater and environmental remediation.
+Added: By combining our talented team of professionals and advanced technology, we solve complex technical challenges to enable a safer, smarter, more secure and more connected world.
We operate in two reporting segments, Federal Solutions and Critical Infrastructure.
24 unchanged sentences
The volume of contract awards can fluctuate in any given period due to win rate and the timing and size of the awards issued by our customers.
−Removed: In Federals Solutions, large awards in 2019 were the primary driver of changes in awards between 2020, 2019 and 2018.
+Added: In Federals Solutions, large awards in 2021 and 2019 were the primary driver of changes in awards between 2021, 2020 and 2019.
Awards in Critical infrastructure were lower in 2019 due to potential awards being pushed out to 2020.
29 unchanged sentences
Backlog in our Critical Infrastructure segment, in 2019, was impacted primarily by a number of potential awards being pushed out to 2020.
−Removed: Our backlog will fluctuate in any given period based on the volume of awards issued in comparison to the revenue generated from our existing contracts.
+Added: Our backlog will fluctuate in any given period based on the volume of awards issued and the rate of revenue generated from our existing contracts.
Book-to-bill is the ratio of total awards to total revenue recorded in the same period.
37 unchanged sentences
Acquired Operations
−Removed: Polaris Alpha
−Removed: On May 31, 2018, we acquired Polaris Alpha for $489.1 million.
−Removed: Polaris Alpha is an advanced, technology-focused provider of innovative mission solutions for national security, intelligence and other U.S.
−Removed: federal customers.
−Removed: The acquisition was funded by cash on-hand and borrowings under our revolving credit facility (the “Revolving Credit Facility”).
−Removed: The financial results of Polaris Alpha have been included in our consolidated results of operations from May 31, 2018 onward.
−Removed: On January 7, 2019, we acquired OGSystems for $292.4 million.
−Removed: OGSystems provides geospatial intelligence, big data analytics and threat mitigation for defense and intelligence customers.
−Removed: The acquisition was funded by cash on-hand and borrowings under our Term Loan and Revolving Credit Facility.
−Removed: The financial results of OGSystems have been included in our consolidated results of operations from January 7, 2019 onward.
−Removed: QRC Technologies
−Removed: On July 31, 2019, we acquired QRC Technologies for $214.1 million.
−Removed: QRC Technologies provides design and development of open-architecture radio-frequency products.
−Removed: The acquisition was funded by cash on-hand and borrowings under our Revolving Credit Facility.
−Removed: The financial results of QRC Technologies have been included in our consolidated results of operations from July 31, 2019 onward.
+Added: BlackHorse Solutions, Inc.
+Added: On July 6, 2021, the Company acquired BlackHorse for $205.0 million.
+Added: BlackHorse expands Parsons’ capabilities and products in next-generation military, intelligence, and space operations, specifically in cyber electronic warfare and information dominance.
+Added: The acquisition was entirely funded by cash on-hand.
+Added: The financial results of BlackHorse have been included in our consolidated results of operations from July 6, 2021 onward.
+Added: Echo Ridge LLC
+Added: On July 30, 2021, the Company acquired Echo Ridge for $9.0 million.
+Added: Echo Ridge adds position, navigation, and timing devices;
+Added: modeling, simulation, test, and measurement tools;
+Added: and deployable software defined radio products and signal processing services to Parsons’ space portfolio.
+Added: The acquisition was entirely funded by cash on-hand.
+Added: The financial results of Echo Ridge have been included in our consolidated results of operations from July 30, 2021 onward.
Braxton Science & Technology Group, LLC
4 unchanged sentences
The financial results of Braxton have been included in our consolidated results of operations from November 19, 2020 onward.
+Added: QRC Technologies
+Added: On July 31, 2019, we acquired QRC Technologies for $214.1 million.
+Added: QRC Technologies provides design and development of open-architecture radio-frequency products.
+Added: The acquisition was funded by cash on-hand and borrowings under our Revolving Credit Facility.
+Added: The financial results of QRC Technologies have been included in our consolidated results of operations from July 31, 2019 onward.
+Added: On January 7, 2019, we acquired OGSystems for $292.4 million.
+Added: OGSystems provides geospatial intelligence, big data analytics and threat mitigation for defense and intelligence customers.
+Added: The acquisition was funded by cash on-hand and borrowings under our Term Loan and Revolving Credit Facility.
+Added: The financial results of OGSystems have been included in our consolidated results of operations from January 7, 2019 onward.
Our results may be affected by variances as a result of weather conditions and contract award seasonality impacts that we experience across our businesses.
18 unchanged sentences
In connection with the IPO, our “S” Corporation status terminated, and we are now treated as a “C” Corporation under Subchapter C of the Internal Revenue Code.
−Removed: The revocation of the our “S” Corporation election had a material impact on our results of operations, financial condition and cash flows.
+Added: The revocation of our “S” Corporation election had a material impact on our results of operations, financial condition and cash flows.
The effective tax rate has increased, and net income has decreased as compared to our “S” Corporation tax years, since we are now subject to both U.S.
−Removed: federal and state corporate income taxes on its earnings.
+Added: federal and state corporate income taxes on our earnings.
Results of Operations
2 unchanged sentences
federal government and our Critical Infrastructure segment derives revenue primarily from government and commercial customers.
−Removed: We recognize revenue for work performed under cost-plus, time-and-materials and fixed-price contracts as follows:
+Added: We enter into the following types of contracts with our customers:
Under cost-plus contracts, we are reimbursed for allowable or otherwise defined costs incurred, plus a fee.
4 unchanged sentences
Under fixed-price contracts, clients pay an agreed fixed-amount negotiated in advance for a specified scope of work.
−Removed: R efer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” and “Note 2 — Summary of Significant Accounting Polices ” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a further description of our policies on revenue recognition.
+Added: Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” and “Note 2— Summary of Significant Accounting Polices ” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a description of our policies on revenue recognition applicable to each type of contract.
The table below presents the percentage of total revenue for each type of contract.
25 unchanged sentences
Operating costs and expenses
−Removed: Operating costs and expenses primarily include direct costs of contracts and indirect, general and administrative expenses.
+Added: Operating costs and expenses primarily include direct costs of contracts and selling, general and administrative expenses.
Costs associated with compensation-related expenses for our people and facilities, which includes ESOP contribution expenses, are the most significant component of our operating expenses.
In 2021, 2020 and 2019, we made annual contributions to the ESOP in the amount of 8% of the participants’ cash compensation for the applicable year.
−Removed: Total ESOP contribution expense was $55.3 million for 2020, $53.6 million for fiscal 2019, and $45.2 million for fiscal 2018, and is recorded in “Direct cost of contracts” and “Indirect, general and administrative expenses.” We expect operating
−Removed: expenses to increase due to our anticipated growth.
+Added: Total ESOP contribution expense was $54.9 million for 2021, $55.3 million for 2020, and $53.6 million for fiscal 2019, and is recorded in “Direct cost of contracts” and “Selling, general and administrative expenses.” We expect operating expenses to increase due to our anticipated growth.
However, on a forward-looking basis, we generally expect these costs to decline as a percentage of our total revenue as we realize the benefits of scale.
Direct costs of contracts consist of direct labor and associated fringe benefits, indirect overhead, subcontractor and materials (“pass-through costs”), travel expenses and other expenses incurred to perform on contracts.
−Removed: Indirect, general and administrative expenses (“IG&A”) include salaries and wages and fringe benefits of our employees not performing work directly for customers, facility costs and other costs related to these indirect functions.
+Added: Selling, general and administrative expenses (“SG&A”) include salaries and wages and fringe benefits of our employees not performing work directly for customers, facility costs and other costs related to these indirect functions.
Other income and expenses
−Removed: Other income and expenses primarily consist of interest income, interest expense, other income, net and interest and other expense associated with claim on long-term contract.
+Added: Other income and expenses primarily consist of interest income, interest expense, and other income, net.
Interest income primarily consists of interest earned on U.S.
2 unchanged sentences
Other income, net primarily consists of gain or loss on sale of assets, sublease income and transaction gain or loss related to movements in foreign currency exchange rates.
−Removed: Included in other income and expenses in 2018 are amounts related to the settlement of a lawsuit in favor of a joint venture in which the Company was the managing partner.
−Removed: With regard to the lawsuit, during the second half of fiscal 2013, a California state court issued a number of preliminary judgments with the final judgment being rendered in early fiscal 2014 in favor of the plaintiff in a lawsuit against the joint venture.
−Removed: We recorded a loss of $98.8 million for fiscal 2013 as a result of these judgments, which included the reversal of $55.1 million in previously recognized revenue.
−Removed: Post-judgment interest was accrued through May 2018 when a total of $133.1 million was accrued in “Provision for contract losses of consolidated joint ventures” on our consolidated balance sheet.
−Removed: On February 28, 2018, the California Court of Appeals vacated the judgement, and in doing so, the appellate court remanded the case to the trial court for the sole purpose of entering a new and final judgement in our favor.
−Removed: On April 9, 2018, the appellate court ruling was appealed by the counterparty to the California Supreme Court.
−Removed: On June 13, 2018, the California Supreme Court denied the counterparty’s appeal.
−Removed: As a result, in the second quarter of 2018 we reversed $133.1 million accrued in “Provision for contract losses on consolidated joint ventures” on our consolidated balance sheet, resulting in a net gain of $129.7 million on our consolidated statements of income, of which $55.1 million was recorded as an increase in revenue with the remainder recorded as other income.
Year ended December 31, 202 1 compared to year ended December 31, 20 20
5 unchanged sentences
Equity in earnings of unconsolidated joint ventures
−Removed: Indirect, general and administrative expenses
+Added: Selling, general and administrative expenses
Operating income
2 unchanged sentences
Other income, net
−Removed: (Interest and other expense) gain associated with claim on long-term contract
Total other income benefit (expense)
9 unchanged sentences
Revenue for the year ended December 31, 2021 compared to the prior year decreased $258.2 million.
−Removed: This decrease was primarily due to a decrease in revenue in our Critical Infrastructure segment of $59.9 million partially offset by an increase in our Federal Solutions segment of $24.0 million.
+Added: This decrease was primarily due to a decrease in revenue in our Critical Infrastructure segment of $234.3 million and a decrease in our Federal Solutions segment of $23.8 million.
See “—Segment Results” below for further discussion.
5 unchanged sentences
Direct cost of contracts
−Removed: Direct cost of contracts decreased in 2020 primarily due to a decrease of $86.4 million in our Critical Infrastructure segment.
−Removed: The decrease was primarily attributable to decrease in business volume on contracts with significant pass-through costs and cost reductions.
+Added: Direct cost of contracts decreased in 2021 primarily due to a decrease of $197.0 million in our Critical Infrastructure segment and a decrease of $37.1 million in our Federal Solutions segment.
+Added: The decrease was primarily attributable to a decrease in business volume on contracts with significant pass-through costs and a decrease in business volume from project completions and transitions.
Equity in earnings of unconsolidated joint ventures
4 unchanged sentences
Equity in earnings of unconsolidated joint ventures
−Removed: Equity in earnings of unconsolidated joint ventures decreased in fiscal 2020 primarily due to a $15.5 million write-down on a project in the Critical Infrastructure segment during 2020, offset in part by increases associated with the timing of the completion of joint ventures and the starting of new joint ventures as part of ordinary course timing fluctuations in our business.
−Removed: Indirect, general and administrative expenses
+Added: Equity in earnings of unconsolidated joint ventures increased in fiscal 2021 primarily due to $7.5 million from newly started joint ventures in 2021.
+Added: The remaining fluctuation was due to decreases associated with the timing of the completion of joint ventures and other small changes across multiple joint ventures as part of ordinary course timing fluctuations in our business.
+Added: In addition, there were
+Added: offsetting write-downs of $15.6 million and $15.5 million in 2021 and 2020, respectively, on a project in the Critical Infrastructure segment.
+Added: Selling, general and administrative expenses
Fiscal Year Ended
2 unchanged sentences
December 31, 2020
−Removed: Indirect, general and administrative expenses
−Removed: The decrease in IG&A expenses for the years ended December 31, 2020 as compared to December 31, 2019 relates primarily to a decline in compensation cost associated with equity-based awards that settle primarily in cash.
−Removed: The compensation cost associated with these awards totaled $9.8 million during the year ended December 31, 2020 as compared to $65.7 million for the year ended December 31, 2019.
−Removed: Cash settled awards are remeasured to an updated fair value at each reporting period until the award is settled.
−Removed: Compensation cost is trued-up at each reporting period for changes in fair value pro-rated for the portion of the requisite service period rendered.
−Removed: The significant decrease in compensation cost related to these cash settled equity-based awards for the year ended December 31, 2020 compared to December 31, 2019 is due primarily to lower share prices over the last 60 trading days of 2020 as compared to the comparable period in 2019, as well as the higher grant price of active awards in 2020.
−Removed: The substantial compensation cost for the year ended December 31, 2019 was due to the significant difference in the fair value of a share of our common stock under Parsons ESOP valuation at December 31, 2018 compared to the fair value of a share of our common stock in the public market at December 31, 2019.
−Removed: See Item 5 of Part II for ranges in the share price of our common stock since the consummation of the IPO and “Note 19— Fair Value of Financial Instruments ” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a description of how the ESOP share value was determined.
−Removed: See “Note 1— Description of Operations ” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more detail regarding our IPO.
+Added: Selling, general and administrative expenses
+Added: SG&A expenses for the years ended December 31, 2021 and December 31, 2020 include $19.6 million and $9.8 million, respectively, of compensation cost associated with equity-based awards.
+Added: Equity awards issued prior to the Company’s IPO were settled in cash and were remeasured to an updated fair value at each reporting period until the award was settled.
+Added: Compensation cost was trued-up at each reporting period for changes in fair value pro-rated for the portion of the requisite service period rendered.
+Added: Subsequent to the IPO, the share price of the Company’s common stock is based on quoted prices on the New York Stock Exchange.
The plans in which these awards were granted have been frozen and the Company does not currently intend to grant any further cash settled equity-based awards.
−Removed: Excluding the compensation costs discussed above, IG&A for the years ended December 31, 2020 and December 31, 2019 was $719.3 million and $715.7 million, respectively.
−Removed: The increase in IG&A of $3.6 million, exclusive of equity compensation cost, was primarily due to additional expenses of $23.8 million associated with business acquisitions, $3.9 million due to a tax law change and $5.0 million related to strategic growth initiatives and public company operating costs.
−Removed: These increases were partially offset by a $18.4 million reduction in transaction-related costs related primarily to our initial public offering in 2019, and a $10.1 million reduction in intangible asset amortization.
+Added: Excluding the compensation costs discussed above, SG&A for the years ended December 31, 2021 and December 31, 2020 was $737.6 million and $719.3 million, respectively.
+Added: The increase in SG&A of $18.3 million, exclusive of equity compensation cost, was primarily due to additional expenses of $25.4 million associated with business acquisitions and $15.3 million intangible asset amortization.
+Added: These increases were partially offset by $8.7 million reduction in transaction-related costs, $11.9 million reduction in incentive costs, and $1.8 million in other costs.
Total other (expense) income
7 unchanged sentences
Total other income (expense)
−Removed: Interest expense decreased in 2020 primarily due a decrease in interest rates year-over-year.
+Added: Interest expense decreased in 2021 primarily due to early adoption of ASU 2020-06 in the first quarter of 2021, resulting in no interest expense related to amortization of the debt discount during 2021 compared to $3.8 million in 2020.
+Added: Refer to “Note 2 – Summary of Significant Accounting Policies” and “Note 12 – Debt and Credit Facilities” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
The amounts in other income (expense), net, are primarily related to transaction gains and losses on foreign currency transactions and sublease income.
5 unchanged sentences
Income tax expense (benefit)
−Removed: Income tax expense increased in fiscal 2020 primarily due to the nonrecurring tax items included in 2019 for tax benefits associated with the remeasurement of our net deferred tax assets as a result of our conversion from “S” Corporation to a “C” Corporation.
−Removed: Our effective tax rate was 26.3% and income tax expense was $42.5 million for the year ended December 31, 2020.
−Removed: As described in “Note 14 – Income Taxes,” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, in connection with our IPO on May 8, 2019, we converted from an “S” Corporation to a “C” Corporation.
−Removed: On a pro forma basis, if we had been taxed as a “C” Corporation for the year ended December 31, 2019, the pro forma effective tax rate would have been 36.9%, and our pro forma income tax expense would have been $24.8 million.
−Removed: The most significant items contributing to the change in the effective tax rate relates to a change in jurisdictional earnings, federal research tax credits and a nonrecurring item included in 2019 associated with equity compensation.
+Added: Income tax expense decreased in fiscal 2021 primarily due to an increase in untaxed income attributable to noncontrolling interests, release of a valuation allowance on foreign tax credits, a change in jurisdictional earnings, and a release of uncertain tax positions, partially offset by a write down of a foreign tax receivable and an increase in executive compensation subject to IRC Section 162(m) limitations.
+Added: Our effective tax rate was 21.0% and 26.3% for the years ended December 31, 2021 and 2020, respectively.
The difference between the statutory U.S.
−Removed: federal income tax rate of 21% and the effective tax rate for the year ended December 31, 2020 primarily relates to state income taxes and a recorded valuation allowance on foreign tax credits, partially offset by benefits related to income attributable to noncontrolling interest and federal research tax credits.
−Removed: The termination of the “S” Corporation status was treated as a change in tax status for Accounting Standards Codification 740, Income Taxes.
−Removed: These rules require that the deferred tax effects of a change in tax status to be recorded to income from continuing operations on the date the “S” Corporation status terminates.
−Removed: At December 31, 2019, the Company had recorded a deferred tax benefit of $93.9 million for the estimated effect of the change in tax status, relating to the recognition of net deferred tax assets for temporary differences in existence on the date of conversion to a “C” Corporation.
−Removed: This estimated amount was adjusted to $90.0 million upon filing of the 2019 tax returns.
−Removed: This adjustment is included in income tax expense for the year ended December 31, 2020.
+Added: federal income tax rate of 21% and the effective tax rate for the year ended December 31, 2021 primarily relates to state income taxes and a recorded valuation allowance on foreign tax credit carryovers, a write down of a foreign tax receivable and an increase in executive compensation subject to IRC Section 162(m) limitations, offset by benefits related to income attributable to noncontrolling interest, release of uncertain tax positions, and federal research tax credits.
+Added: For the year ended December 31, 2020, the difference primarily relates to state income taxes and a recorded valuation allowance on foreign tax credits, partially offset by benefits related to income attributable to noncontrolling interest and federal research tax credits.
Year ended December 31, 2020 compared to year ended December 31, 2019
−Removed: The following table sets forth our results of operations for 2019 and 2018 as a percentage of revenue.
+Added: The following table sets forth our results of operations for fiscal 2020 and fiscal 2019 as a percentage of revenue.
Fiscal Year Ended
3 unchanged sentences
Equity in earnings of unconsolidated joint ventures
−Removed: Indirect, general and administrative expenses
+Added: Selling, general and administrative expenses
Operating income
2 unchanged sentences
Other income, net
−Removed: (Interest and other expense) gain associated with claim on long-term contract
Total other income benefit (expense)
8 unchanged sentences
December 31, 2019
−Removed: Revenue for the year ended December 31, 2018 included $55.1 million related to the settlement of a claim that was resolved in favor of the Company on June 13, 2018, in our Critical Infrastructure segment.
−Removed: See “Results of Operations—Other income and expenses” above for a description of this matter.
−Removed: Excluding the claim settlement, revenue increased $449.4 million for the year ended December 31, 2019 when compared to the prior year, primarily due to an increase in revenue in our Federal Solutions segment of $408.9 million and an increase in our Critical Infrastructure segment of $40.5 million.
+Added: Revenue for the year ended December 31, 2020 compared to the prior year decreased $35.9 million.
+Added: This decrease was primarily due to a decrease in revenue in our Critical Infrastructure segment of $59.9 million partially offset by an increase in our Federal Solutions segment of $24.0 million.
See “—Segment Results” below for further discussion.
5 unchanged sentences
Direct cost of contracts
−Removed: Direct cost of contracts increased in fiscal 2019 primarily due to an increase of $289.6 million in our Federal Solutions segment and an increase of $38.5 million in our Critical Infrastructure segment.
−Removed: The increase in our Federal Solutions segment was due primarily to business acquisitions, which added $239.4 million, and $50.2 million from an increase in business volume on existing contracts, offset by the completion of a significant contract.
−Removed: The change in our Critical Infrastructure segment was primarily due to an increase in business volume on existing contracts, along with normal course fluctuations in the winding down and starting up of contracts.
+Added: Direct cost of contracts decreased in 2020 primarily due to a decrease of $86.4 million in our Critical Infrastructure segment.
+Added: The decrease was primarily attributable to a decrease in business volume on contracts with significant pass-through costs and cost reductions.
Equity in earnings of unconsolidated joint ventures
4 unchanged sentences
Equity in earnings of unconsolidated joint ventures
−Removed: Equity in earnings of unconsolidated joint ventures increased in fiscal 2019 primarily due to increased activity under a number of the Company’s existing joint ventures, offset by the completion of a significant joint venture during the year.
−Removed: Indirect, general and administrative expenses
+Added: Equity in earnings of unconsolidated joint ventures decreased in fiscal 2020 primarily due to a $15.5 million write-down on a project in the Critical Infrastructure segment during 2020, offset in part by increases associated with the timing of the completion of joint ventures and the starting of new joint ventures as part of ordinary course timing fluctuations in our business.
+Added: Selling, general and administrative expenses
Fiscal Year Ended
2 unchanged sentences
December 31, 2019
−Removed: Indirect, general and administrative expenses
−Removed: IG&A for the years ended December 31, 2019 and December 31, 2018 include $65.7 million and $16.5 million, respectively, of compensation cost related to equity-based awards that primarily settle in cash.
+Added: Selling, general and administrative expenses
+Added: The decrease in SG&A expenses for the years ended December 31, 2020 as compared to December 31, 2019 relates primarily to a decline in compensation cost associated with equity-based awards that settle primarily in cash.
+Added: The compensation cost associated with these awards totaled $9.8 million during the year ended December 31, 2020 as compared to $65.7 million for the year ended December 31, 2019.
Cash settled awards are remeasured to an updated fair value at each reporting period until the award is settled.
Compensation cost is trued-up at each reporting period for changes in fair value pro-rated for the portion of the requisite service period rendered.
−Removed: The significant increase in compensation cost related to these cash settled equity-based awards for the year ended December 31, 2019 is due to the significant difference in the fair value of a share of our common stock under Parsons ESOP valuation at December 31, 2018 compared to the fair value of a
−Removed: share of our common stock in the public market at December 31, 2019.
−Removed: See Item 5 of Part II for ranges in the share price of our common stock since the consummation of the IPO and “Note 19 — Fair Value of Financial Instruments ” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a description of how the ESOP share value is determined.
−Removed: S ee “Note 1 — Description of Operations ” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more detail regarding our IPO.
+Added: The significant decrease in compensation cost related to these cash settled equity-based awards for the year ended December 31, 2020 compared to December 31, 2019 is due primarily to lower share prices over the last 60 trading days of 2020 as compared to the comparable period in 2019, as well as the higher grant price of active awards in 2020.
+Added: The substantial compensation cost for the year ended December 31, 2019 was due to the significant difference in the fair value of a share of our common stock under Parsons ESOP valuation at December 31, 2018 compared to the fair value of a share of our common stock in the public market at December 31, 2019.
+Added: See Item 5 of Part II for ranges in the share price of our common stock since the consummation of the IPO and “Note 19— Fair Value of Financial Instruments ” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a description of how the ESOP share value was determined.
+Added: See “Note 1— Description of Operations ” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more detail regarding our IPO.
The plans in which these awards were granted have been frozen and the Company does not currently intend to grant any further cash settled equity-based awards.
−Removed: Excluding the compensation costs discussed above, IG&A for the years ended December 31, 2019 and December 31, 2018 were $715.7 million and $580.9 million, respectively.
−Removed: The increase in IG&A of $134.8 million for the year ended December 31, 2019 when compared to the prior year was primarily due to our Federal Solutions segment, most of which is related to additional expenses of $47.8 million from business acquisitions, $50.9 million from the amortization of intangible assets related to our acquisitions and $11.2 million in acquisition-related expenses.
−Removed: The remaining increase of $24.9 million is related to additional bid and proposal costs and an increase in corporate functional group costs.
−Removed: Total other income (expense)
+Added: Excluding the compensation costs discussed above, SG&A for the years ended December 31, 2020 and December 31, 2019 was $719.3 million and $715.7 million, respectively.
+Added: The increase in SG&A of $3.6 million, exclusive of equity compensation cost, was primarily due to additional expenses of $23.8 million associated with business acquisitions, $3.9 million due to a tax law
+Added: change and $5.0 million related to strategic growth initiatives and public company operating costs.
+Added: These increases were partially offset by a $18.4 million reduction in transaction-related costs related primarily to our initial public offering in 2019 , and a $10.1 million reduction in intangible asset amortization.
+Added: Total other (expense) income
Fiscal Year Ended
5 unchanged sentences
Other income (expense), net
−Removed: Gain associated with claim on long-term contract
Total other income (expense)
−Removed: Interest income is related to interest earned on cash balances held.
−Removed: Interest expense is primarily due to debt related to our business acquisitions.
−Removed: During the year ended December 31, 2019, our term loan of $150 million was paid off and the amount of debt outstanding under our revolving credit facility was reduced.
+Added: Interest expense decreased in 2020 primarily due a decrease in interest rates year-over-year.
The amounts in other income (expense), net, are primarily related to transaction gains and losses on foreign currency transactions and sublease income.
−Removed: The amount presented in gain associated with claim on long-term contract for the year ended December 31, 2018 relates to a lawsuit against a joint venture in which we are the managing partner.
−Removed: See “Results of Operations—Other income and expenses” above for a description of this matter, which was resolved in favor of the company on June 13, 2018.
−Removed: Income tax expense benefit
+Added: Income tax expense
Fiscal Year Ended
3 unchanged sentences
Income tax expense (benefit)
−Removed: Income tax expense decreased in fiscal 2019 primarily due to the revaluation of our deferred tax assets and liabilities as a result of our conversion from “S” Corporation to a “C” Corporation, partially offset by the impact of the increase in overall pre-tax earnings subject to taxation as a result of our conversion to a “C” Corporation.
+Added: Income tax expense increased in fiscal 2020 primarily due to the nonrecurring tax items included in 2019 for tax benefits associated with the remeasurement of our net deferred tax assets as a result of our conversion from “S” Corporation to a “C” Corporation.
+Added: Our effective tax rate was 26.3% and income tax expense was $42.5 million for the year ended December 31, 2020.
As described in “Note 14 – Income Taxes,” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, in connection with our IPO on May 8, 2019, we converted from an “S” Corporation to a “C” Corporation.
−Removed: On a pro forma basis, if we had been taxed as a “C” Corporation for the years ended December 31, 2019 and December 31, 2018, the pro forma effective
−Removed: tax rate would have been 36.89% and 28.77%, respectively, and our pro forma income tax expense would have been $24.8 million and $74.8 million, respectively.
−Removed: The most significant item contributing to the change in the effective tax rate relates to a change in jurisdictional earnings.
+Added: On a pro forma basis, if we had been taxed as a “C” Corporation for the year ended December 31, 2019, the pro forma effective tax rate would have been 36.9%, and our pro forma income tax expense would have been $24.8 million.
+Added: The most significant items contributing to the change in the effective tax rate relates to a change in jurisdictional earnings, federal research tax credits and a nonrecurring item included in 2019 associated with equity compensation.
The difference between the statutory U.S.
−Removed: federal income tax rate of 21% and the effective tax rate for the year ended December 31, 2019 primarily relates to foreign earnings which are subject to foreign income taxes at rates that exceed the U.S.
−Removed: income tax rate.
+Added: federal income tax rate of 21% and the effective tax rate for the year ended December 31, 2020 primarily relates to state income taxes and a recorded valuation allowance on foreign tax credits, partially offset by benefits related to income attributable to noncontrolling interest and federal research tax credits.
The termination of the “S” Corporation status was treated as a change in tax status for Accounting Standards Codification 740, Income Taxes.
These rules require that the deferred tax effects of a change in tax status to be recorded to income from continuing operations on the date the “S” Corporation status terminates.
−Removed: Through the year ended December 31, 2019, the Company recorded a deferred tax benefit of $93.9 million for the estimated effect of the change in tax status, relating to the recognition of net deferred tax assets for temporary differences in existence on the date of conversion to a “C” Corporation.
+Added: At December 31, 2019, the Company had recorded a deferred tax benefit of $93.9 million for the estimated effect of the change in tax status, relating to the recognition of net deferred tax assets for temporary differences in existence on the date of conversion to a “C” Corporation.
+Added: This estimated amount was adjusted to $90.0 million upon filing of the 2019 tax returns.
+Added: This adjustment is included in income tax expense for the year ended December 31, 2020.
+Added: Non-GAAP Financial Measures :
+Added: dollars in thousands)
+Added: December 31, 2021
+Added: December 31, 2020
+Added: December 31, 2019
+Added: Other Information:
+Added: Adjusted EBITDA (1)
+Added: Net Income Margin (2)
+Added: Adjusted EBITDA Margin (3)
+Added: A reconciliation of net income (loss) attributable to Parsons Corporation to Adjusted EBITDA is set forth below (in thousands).
+Added: Net Income Margin is calculated as net income including noncontrolling interest divided by revenue in the applicable period.
+Added: Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by revenue in the applicable period.
+Added: December 31, 2021
+Added: December 31, 2020
+Added: December 31, 2019
+Added: Net income attributable to Parsons Corporation
+Added: Interest expense, net
+Added: Income tax expense (benefit)
+Added: Depreciation and amortization
+Added: Net income attributable to noncontrolling interests
+Added: Equity-based compensation (a)
+Added: Transaction-related costs (b)
+Added: Restructuring (c)
+Added: Adjusted EBITDA
+Added: Reflects equity-based compensation costs primarily related to cash-settled awards.
+Added: See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K for a further discussion of these awards.
+Added: Reflects costs incurred in connection with acquisitions, the IPO, and other non-recurring transaction costs, primarily fees paid for professional services and employee retention.
+Added: Reflects costs associated with and related to our corporate restructuring initiatives.
+Added: 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.
+Added: Adjusted EBITDA is a supplemental measure of our operating performance included in this Annual Report on Form 10-K because it is used by management and our board of directors to assess our financial performance both on a segment and on a consolidated basis.
+Added: We discuss Adjusted EBITDA because our management uses this measure for business planning purposes, including to manage the business against internal projected results of operations and to measure the performance of the business generally.
+Added: Adjusted EBITDA is frequently used by analysts, investors and other interested parties to evaluate companies in our industry.
+Added: Adjusted EBITDA is not a U.S.
+Added: GAAP measure of our financial performance or liquidity and should not be considered as an alternative to net income as a measure of financial performance or cash flows from operations as measures of liquidity, or any other performance measure derived in accordance with U.S.
+Added: We define Adjusted EBITDA as net income attributable to Parsons Corporation, adjusted to include net income attributable to noncontrolling interests and to exclude interest expense (net of interest income), provision for income taxes, depreciation and amortization and certain other items that we do not consider in our evaluation of ongoing operating performance.
+Added: These other items include, among other things, impairment of goodwill, intangible and other assets, interest and other expenses recognized on litigation matters, amortization of deferred gain resulting from sale-leaseback transactions, expenses incurred in connection with acquisitions and other non-recurring transaction costs, equity-based compensation, and expenses related to our corporate restructuring initiatives.
+Added: Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
+Added: Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect tax payments, debt service requirements, capital expenditures and certain other cash costs that may recur in the future, including, among other things, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized.
+Added: compensates for these limitations by relying on our U.S.
+Added: GAAP results in addition to using Adjusted EBITDA supplementally.
+Added: Our measure of Adjusted EBITDA is not necessarily comparable to similarly titled captions of other companies due to different methods of calculation.
+Added: See “Segment Results” below and "Note 21— Segments Information ” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further discussion regarding our segment Adjusted EBITDA attributable to Parsons Corporation
Segment Results
1 unchanged sentence
Adjusted EBITDA attributable to Parsons Corporation is Adjusted EBITDA excluding Adjusted EBITDA attributable to noncontrolling interests.
−Removed: See “Selected Financial Data” for a discussion of our definition of Adjusted EBITDA, how we use this metric, why we present this metric and the material limitations on the usefulness of this metric.
−Removed: See “Note 21— Segments Information ” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further discussion regarding our segment Adjusted EBITDA attributable to Parsons Corporation.
The following table shows Adjusted EBITDA attributable to Parsons Corporation for each of our reportable segments and Adjusted EBITDA attributable to noncontrolling interests:
15 unchanged sentences
Adjusted EBITDA attributable to Parsons Corporation
−Removed: The increase in Federal Solutions revenue for the year ended December 31, 2020 compared to the corresponding period last year was primarily due to incremental revenue from business acquisitions, which added $27.7 million.
−Removed: The decrease in Federal Solutions Adjusted EBITDA attributable to Parsons Corporation for the year ended December 31, 2020 compared to the prior year was primarily due to an increase in IG&A, partially offset by an increase in business volume from business acquisitions and higher project margins.
+Added: The decrease in Federal Solutions revenue for the year ended December 31, 2021 compared to the corresponding period last year was primarily due to a decrease in business volume from program completions and transitions, a reserve taken on a program, and the competitive hiring environment for cleared personnel.
+Added: The decreases were partially offset by increases from business acquisitions of $160.8 million.
+Added: The decrease in Federal Solutions Adjusted EBITDA attributable to Parsons Corporation for the year ended December 31, 2021 compared to the prior year was primarily due to a $5.5 million net impact from a reserve taken on a program during 2021, compared to a $13.9 million incentive fee recognized during 2020, partially offset by an increase related to business acquisitions.
Critical Infrastructure
4 unchanged sentences
Adjusted EBITDA attributable to Parsons Corporation
−Removed: The decrease in revenue for the year ended December 31, 2020 compared to the corresponding period last year was primarily related to a decrease in business volume on contracts with pass-through revenue, along with normal course net fluctuations in the winding down and starting up of contracts.
−Removed: The increase in Critical Infrastructure Adjusted EBITDA attributable to Parsons for the year ended December 31, 2020 compared to the corresponding period last year was primarily due to improved project margins offset in part by a decrease in equity in earnings.
+Added: The decrease in revenue for the year ended December 31 , 20 2 1 compared to the corresponding period last year was primarily related to a de crease in business volume from program completions and transitions , lower pas s through revenue, and write downs on projects during the year .
+Added: The decrease in Critical Infrastructure Adjusted EBITDA attributable to Parsons for the year ended December 31, 2021 compared to the corresponding period last year was primarily due to write downs on projects and a decrease in business volume.
Year ended December 31, 2020 compared to year ended December 31, 2019
5 unchanged sentences
Adjusted EBITDA attributable to Parsons Corporation
−Removed: The increase in Federal Solutions revenue for the year ended December 31, 2019 compared to the previous year was primarily due to incremental revenue from business acquisitions, which added $317.4 million.
−Removed: Federal Solutions organic revenue grew $91.5 million, which included significant incentive fee recognition and an increase in business volume on existing contracts, offset by the completion of a significant contract.
−Removed: The increase in Federal Solutions Adjusted EBITDA attributable to Parsons Corporation for the year ended December 31, 2019 compared to the previous year was primarily due to business acquisitions, an increase in business volume on existing contracts, and generally higher profit margins driven by significant incentive fee recognition.
−Removed: These increases were partially offset by an increase in IG&A, driven by an increase in bid and proposal costs and a greater allocation of corporate IG&A in line with the segment’s growing share of overall business, as well as the completion of a significant contract.
+Added: The increase in Federal Solutions revenue for the year ended December 31, 2020 compared to the corresponding period last year was primarily due to incremental revenue from business acquisitions, which added $27.7 million.
+Added: The decrease in Federal Solutions Adjusted EBITDA attributable to Parsons Corporation for the year ended December 31, 2020 compared to the prior year was primarily due to an increase in IG&A, partially offset by an increase in business volume from business acquisitions and higher project margins.
Critical Infrastructure
4 unchanged sentences
Adjusted EBITDA attributable to Parsons Corporation
−Removed: As discussed above, Critical Infrastructure revenue for the year ended December 31, 2018 included $55.1 million related to the settlement of a claim that was resolved in favor of the Company.
−Removed: Excluding the claim settlement, revenue for the year ended December 31, 2019 compared to the previous year increased $44.2 million.
−Removed: This increase in revenue was primarily related to an increase in business volume under existing contracts, along with normal course fluctuations in the winding down and starting up of contracts.
−Removed: The increase in Critical Infrastructure Adjusted EBITDA attributable to Parsons for the year ended December 31, 2019 compared to the previous year was primarily due to an increase in business volume, a decrease in IG&A, primarily due to a lower allocation of corporate IG&A in line with the segment’s share of overall business, and an increase in equity in earnings of unconsolidated joint ventures.
+Added: The decrease in revenue for the year ended December 31, 2020 compared to the corresponding period last year was primarily related to a decrease in business volume on contracts with pass-through revenue, along with normal course net fluctuations in the winding down and starting up of contracts
+Added: The increase in Critical Infrastructure Adjusted EBITDA attributable to Parsons for the year ended December 31, 2020 compared to the corresponding period last year was primarily due to improved project margins offset in part by a decrease in equity in earnings.
Liquidity and Capital Resources
7 unchanged sentences
We calculate our available liquidity as a sum of cash and cash equivalents from our consolidated balance sheet plus the amount available and unutilized on our Credit Agreement.
−Removed: There are likely to be certain impacts in our ability to collect accounts receivable as a result of the economic impacts from the COVID-19 pandemic.
−Removed: Accounts receivable reflect amounts due from both commercial and government customers.
−Removed: Our commercial customers are comprised principally of large, well-known and well-established companies.
−Removed: Our government customers are comprised principally of national, state and local agencies in the U.S.
−Removed: and Middle East.
−Removed: We have not seen and do not expect there to be a material risk of non-payment from either our government agency or commercial customers.
−Removed: We have experienced payment delays due to administrative limitations from both types of customers.
−Removed: We believe we have adequate liquidity and capital resources to fund our operations, support our debt service and support our ongoing acquisition strategy for at least the next twelve months based on the liquidity from cash provided by our operating activities, cash and cash equivalents on-hand and our borrowing capacity under our Revolving Credit Facility.
−Removed: We do not anticipate that the COVID-19 pandemic-related economic impacts will impair our ability to continue to maintain compliance with its debt covenants or access available borrowing capacity from our banks.
+Added: As of December 31, 2021, we believe we have adequate liquidity and capital resources to fund our operations, support our debt service and support our ongoing acquisition strategy for at least the next twelve months based on the liquidity from cash provided by our operating activities, cash and cash equivalents on-hand and our borrowing capacity under our Revolving Credit Facility.
+Added: We do not anticipate that the COVID-19 pandemic-related economic impacts will impair our ability to continue to maintain compliance with our debt covenants or access available borrowing capacity from our banks
Cash received from customers, either from the payment of invoices for work performed or for advances in excess of revenue recognized, is our primary source of cash.
14 unchanged sentences
Our working capital (current assets less current liabilities) was $601.6 million at December 31, 2021, $655.7 million at December 31, 2020 and $382.0 million at December 31, 2019.
−Removed: Our cash, cash equivalents and restricted cash in creased by $206.0 million to $487.2 million at December 31, 20 20 from $195.4 million at December 31, 2019.
−Removed: This compares to a de crease in cash, cash equivalents and restricted cash of $ 85.8 million to $ 195.4 million at December 31 , 20 19 from $ 281.2 million at December 31 , 201 8 .
+Added: Our cash, cash equivalents and restricted cash decreased by $143.3 million to $343.9 million at December 31, 2021 from $487.2 million at December 31, 2020.
+Added: This compares to an increase in cash, cash equivalents and restricted cash of $291.8 million to $487.2 million at December 31, 2020 from $195.4 million at December 31, 2019.
The following table summarizes our sources and uses of cash over the periods presented (in thousands):
5 unchanged sentences
Net cash used in investing activities
−Removed: Net cash provided by financing activities
+Added: Net cash (used in) provided by financing activities
Effect of exchange rate changes
−Removed: Net increase (decrease) in cash and cash equivalents
+Added: Net (decrease) increase in cash and cash equivalents
Operating Activities
3 unchanged sentences
Our operating cash flows are primarily affected by our ability to invoice and collect from our clients in a timely manner, our ability to manage our vendor payments and the overall profitability of our contracts.
+Added: Net cash provided by operating activities decreased $83.6 million to $205.6 million during 2021 compared to $289.2 million during 2020.
+Added: The decrease in net cash provided by operating activities is primarily due to a $32.9 million change in net income after adjusting for non-cash items and a change in the use of cash related to our working capital accounts of $35.6 million (primarily from accounts receivable, contract assets, prepaid expenses and current assets, offset by accounts payable and accrued expenses).
+Added: Under the CARES Act, the Company received a net cash benefit in 2020 of $35.2 million from the deferral of social security taxes otherwise due from April 10, 2020 through the year ended December 31, 2020.
+Added: One-half of the deferred amount was paid during the third quarter of 2021.
+Added: The decrease was also due to a $15.0 million change in other long-term liabilities.
+Added: Net DSOs increased from 64 days to 68 days primarily driven by the change in our working capital accounts discussed above.
Net cash provided by operating activities increased $68.9 million to $289.2 million during 2020 compared to $220.2 million during 2019.
1 unchanged sentence
Under the CARES Act, the Company received a net cash benefit of $35.2 million from the deferral of social security taxes otherwise due from April 10, 2020 through the year ended December 31, 2020.
−Removed: One-half of the deferred amount is due no later than December 31, 2021 and the second half no later than December 31, 2022.
+Added: One-half of the deferred amount was paid during the third quarter of 2021 and the second half is due no later than December 31, 2022.
These positive changes in operating cash flows were offset, in part, by a $57.6 million change in other long-term liabilities, primarily driven by the payment of long-term employee incentives.
Net DSOs increased from 55 days to 64 days primarily driven by the change in our working capital accounts discussed above.
−Removed: Net cash provided by operating activities decreased $64.4 million to $220.2 million during 2019 compared to $284.6 million during 2018.
−Removed: The decrease in net cash provided by operating activities is primarily due to a change in the use of cash related to our working capital accounts of $64.1 million (primarily driven by growth in accounts receivable and contract assets net of contract liabilities), and a $8.8 million change in net income after adjusting for non-cash items.
−Removed: These negative changes in operating cash flows were offset, in part, by a $8.6 million change in other long-term liabilities, primarily related to our insurance reserves.
−Removed: Net DSOs increased from 52 days to 55 days primarily driven by the change in our working capital accounts discussed above.
In connection with our IPO on May 8, 2019, the Company converted from an “S” Corporation to a “C” Corporation as described in “Note 14 – Income Taxes” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
4 unchanged sentences
Net cash used in investing activities consists primarily of cash flows associated with capital expenditures and business acquisitions.
−Removed: Net cash used in investing activities decreased $224.4 million during 2020 compared to 2019, primarily due to the use of $287.5 million, net of cash acquired, for the acquisition of OGSystems and the use of $208.2 million, net of cash acquired, for the acquisition of QRC Technologies in 2019, compared to $302.4 million, net of cash acquired, for the acquisition of Braxton in 2020.
−Removed: Net cash used in investing activities increased $67.5 million during 2019 compared to 2018, primarily due to an increase in cash used for capital expenditures of $38.3 million, principally related to our office space, investments in unconsolidated joint ventures of $19.9 million, and payments for acquisitions, net of cash acquired of $13.7 million.
+Added: Net cash used in investing activities de c reased $105.5 million during 202 1 compared to 20 20 , primarily due to the use of $189.6 million, net of cash acquired, for the acquisition of BlackHorse and the use of $8.7 million, net of cash acquired, for the acquisition of Echo Ridge in 2021, compared to $ 302 .
+Added: 4 million, net of cash acquired, for the acquisition of Braxton in 2020.
+Added: Net cash used in investing activities also decreased due to proceeds from sale of investments in unconsolidated joint ventures of $14.8 million and a decrease in cash used for capital expenditures of $12.9 million, offset by increased investments in unconsolidated joint ventures of $27.4 million
+Added: Net cash used in investing activities decreased $224.4 million during 2020 compared to 2019, primarily due to the use of $302.4 million, net of cash acquired, for the acquisition of Braxton in 2020, compared to $287.5 million, net of cash acquired, for the acquisition of OGSystems®, and the use of $208.2 million, net of cash acquired, for the acquisition of QRC Technologies in 2019.
Financing Activities
Net cash provided by financing activities is primarily associated with proceeds from debt, the repayment thereof, distributions to noncontrolling interests and payments to the ESOP in connection with the redemption of ESOP participants’ interests prior to the 180-day lock-up period which ended November 3, 2019.
−Removed: We spent $0 in 2020, $6.3 million in 2019, and $125.8 million in 2018 in connection with the redemption of ESOP participants’ interests.
−Removed: With a public market for our common stock, cash is no longer required for ESOP redemptions after November 3, 2019.
+Added: We spent $6.3 million in 2019 in connection with the redemption of ESOP participants’ interests.
+Added: With a public market for our common stock, cash is no longer required for ESOP redemptions after November 3, 2019 and we did not spend any amounts in connection with the redemption of ESOP participants’ interests in 2021 and 2020.
Participants now receive distributions of their ESOP interests in shares of our common stock.
+Added: Net cash (used in) provided by financing activities decreased $454.7 million to ($106.5) million in 2021 compared to $348.2 million in 2020.
+Added: 2021 activities include repayment of the $50.0 million Series A tranche of our Senior Note during July 2021, repurchases of common stock of $21.7 million and increased distributions to noncontrolling interests of $32.1 million, compared to $348.5 million of net proceeds from the issuance of Convertible Senior Notes in 2020.
Net cash provided by financing activities increased $82.2 million to $348.2 million in 2020 compared to $266.0 million in 2019.
1 unchanged sentence
2019 activities are primarily comprised of $536.9 million of net proceeds from the IPO, offset in part by net repayments under our revolving credit agreement of $180 million and payment of the IPO dividend of $52.1 million.
−Removed: Net cash provided by financing activities increased $210.6 million in 2019 compared to 2018, primarily due to $536.9 million of net proceeds from the IPO and a reduction of $119.5 million in the purchases of treasury stock related to redemptions of ESOP interests in 2019.
−Removed: These changes in cash flow provided by financing activities were offset, in part, by a change in net repayments under our revolving credit agreement of $360.0 million, payment of the IPO dividend of $52.1 million, an increase of $23.4 million in distributions to noncontrolling interests and a decrease of $10.6 million in contributions by noncontrolling interests.
Letters of Credit
2 unchanged sentences
Letters of credit outstanding under the Credit Agreement total $44.3 million.
−Removed: Contractual Obligations
−Removed: The following table summarizes our contractual obligations that require us to make future cash payments as of December 31, 2020.
−Removed: For contractual obligations, we included payments that we have an unconditional obligation to make.
−Removed: dollars in thousands)
−Removed: Senior notes (1)
−Removed: Convertible senior notes (2)
−Removed: Operating lease obligations
−Removed: Finance lease obligations
−Removed: Total minimum payments
−Removed: Consists of our principal and interest obligations under Senior Notes.
−Removed: See “Note 1 2 — Debt and Credit Facilities ” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information regarding our debt and related matters.
−Removed: In August 2020, the Company issued an aggregate $400.0 million of 0.25% Convertible Senior Notes due 2025, unless earlier converted, redeemed, or repurchased.
−Removed: Contractual obligation consists of principal and interest.
−Removed: See “Note 12— Debt and Credit Facilities ” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information regarding our debt and related matters.
−Removed: In the normal course of business, we enter into agreements with subcontractors and vendors to provide products and services that we consume in our operations or that are delivered to our clients.
−Removed: These products and services are not considered unconditional obligations until the products and services are actually delivered, at which time, we record a liability for our obligation.
Critical Accounting Policies and Estimates
5 unchanged sentences
We believe that the following items are the most critical accounting policies and estimates that involved significant judgment as we prepared our financial statements.
−Removed: We consider an accounting policy or estimate to be critical if the policy or estimate requires assumptions to be made that were uncertain at the time they were made and if changes in these assumptions could have a material impact on our financial condition or results of operations.
+Added: We consider an accounting policy
+Added: or estimate to be critical if the policy or estimate requires assumptions to be made that were uncertain at the time they were made and if changes in these assumptions could have a material impact on our financial condition or results of operations.
Revenue Recognition and Cost Estimation
−Removed: On December 30, 2017, the Company adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers , (“ASC 606”), using the modified retrospective method, which provides for a cumulative effect adjustment to retained earnings beginning in fiscal 2018 for those uncompleted contracts impacted by the adoption of the new standard.
−Removed: The difference between the recognition criteria under ASC-606 and our previous recognition practices under ASC 605-35 was recognized through a cumulative adjustment of $4.7 million that was made to the opening balance of accumulated deficit as of December 30, 2017.
−Removed: The cumulative effect of adopting ASC 606 was primarily due to combining certain deliverables that were previously considered separate deliverables into a single performance obligation and the transition of certain cost-type contracts into the cost-to-cost measure of progress method.
−Removed: Consistent with the modified retrospective transition approach, the comparative fiscal 2017 period was not adjusted to conform to the current period presentation.
−Removed: The following are the significant policies and practices as applied to our business.
In our industry, recognition of revenue and profit on long-term contracts requires the use of assumptions and estimates related to total contract revenue, total cost at completion, and the measurement of progress towards completion.
72 unchanged sentences
For purposes of impairment testing, goodwill is allocated to the applicable reporting units based on the current reporting structure.
−Removed: When evaluating goodwill for impairment, we 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.
+Added: When evaluating
+Added: goodwill for impairment, we 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 we do not perform a qualitative assessment, or if we determine that it is not more likely than not that the fair value of our reporting units exceeds their carrying amounts, we perform a quantitative assessment and calculate the estimated fair value of the respective reporting unit.
29 unchanged sentences
Equal weighing is given to each of the methods used to estimate the fair value of reporting units.
−Removed: Our last review at October 1, 2020 (i.e.
+Added: review at October 1, 20 2 1 (i.e.
, the first day of our fourth quarter in fiscal 20 20 ), indicated that we had no impairment of goodwill, and all of our reporting units had estimated fair values that were in excess of their carrying values, including goodwill.
−Removed: We had no reporting units that had estimated fair values that exceeded their carrying values by less than 75%.
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 ten years.
34 unchanged sentences
Shares held by the ESOP or committed to be contributed to the ESOP were presented as temporary equity at December 31, 2018 as they included a cash redemption feature that was not solely within our control.
−Removed: At the conclusion of the 180-day lock-up period, ESOP distributions are no longer made in cash and are now made in shares of
−Removed: our common stock .
−Removed: A ccordingly, a t December 31, 2019, shares held by the ESOP were reclassified from temporary equity to permanent equity.
+Added: At the conclusion of the 180-day lock-up period, ESOP distributions are no longer made in cash and are now made in shares of our common stock.
+Added: Accordingly, at December 31, 2019, shares held by the ESOP were reclassified from temporary equity to permanent equity.
Throughout the year, as employee services are rendered, we record compensation expense based on salaries of eligible employees.
11 unchanged sentences
Equity-Based Compensation
−Removed: We measures the value of services received from employees and directors in exchange for an equity-based award based on the grant date fair value.
+Added: We measure the value of services received from employees and directors in exchange for an equity-based award based on the grant date fair value.
We issue equity-based awards that settle in shares of our common stock.
3 unchanged sentences
Compensation cost for cash settled and performance awards are trued-up at each reporting period for changes in fair value and expected shares pro-rated for the portion of the requisite service period rendered.
−Removed: We recognize compensation costs for these awards on either a straight-line or accelerated basis over the vesting period of the award in “Indirect, general and administrative expenses” in the consolidated statements of income.
+Added: We recognize 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 expenses” in the consolidated statements of income.
Self-Insurance
2 unchanged sentences
The estimate of self-insurance liability includes an estimate of incurred but not reported claims, based on data compiled from historical experience.
+Added: Actual losses and related expenses may deviate, perhaps substantially, from the self-insurance liability estimates reflected in our financial statements.
Recent Accounting Pronouncements
13 unchanged sentences
As of December 31, 2021, we had no loan amounts outstanding under the Revolving Credit Facility.
−Removed: Borrowings under the Revolving Credit Facility bear interest, at our option, at either the Base Rate (as defined in the Credit Agreement), plus an applicable margin, or LIBOR plus an applicable margin.
−Removed: The applicable margin for Base Rate loans is a range of 0.125% to 1.00% and the applicable margin for LIBOR loans is a range of 1.125% to 2.00%, both based on the leverage ratio of the Company at the end of each fiscal quarter.
+Added: Borrowings under the new Credit Facility effective June 2021 bear interest at either a eurocurrency 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%, both based on the leverage ratio of the Company at the end of each quarter.
+Added: Prior to June 2021, interest on borrowings under the Credit Facility were at either the base rate (as defined in the Credit Agreement), plus an applicable margin, or LIBOR plus an applicable margin.
+Added: The applicable margin for base rate loans was a range of 0.125% to 1.00% and the applicable margin for LIBOR loans was a range of 1.125% to 2.00%, both based on the leverage ratio of the Company at the end of each quarter.
The rates at December 31, 2021 and December 31, 2020 were 1.36% and 1.87%, respectively.
7 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.