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Segments Information | 12 Months Ended
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Dec. 31, 2019
Segment Reporting [Abstract] |
Segments Information |
2 1. | 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 cybersecurity, missile defense, and military facility modernization, logistics support, hazardous material remediation and engineering services. The Critical Infrastructure segment provides integrated engineering and management services for complex physical and digital infrastructure around the globe. The Critical Infrastructure segment is a technology innovator focused on next generation digital systems and complex structures. Industry leading capabilities in engineering and project management allow the Company to deliver significant value to customers by employing cutting-edge technologies, improving timelines and reducing costs. The Company defines its reportable segments based on the way the chief operating decision maker (“CODM”), currently its Chairman and Chief Executive Officer, evaluates the performance of each segment and manages the operations of the Company for purposes of allocating resources among the segments. The CODM evaluates segment operating performance using segment Revenue and segment Adjusted EBITDA attributable to Parsons Corporation. The following table summarizes business segment information for the periods presented (in thousands):
|  | 2017 |  |  | 2018 |  |  | 2019 |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |
Federal Solutions |  | $ | 1,079,906 |  |  | $ | 1,479,007 |  |  | $ | 1,887,907 |
Critical Infrastructure |  |  | 1,937,105 |  |  |  | 2,081,501 |  |  |  | 2,066,905 |
Total revenues |  | $ | 3,017,011 |  |  | $ | 3,560,508 |  |  | $ | 3,954,812 |
The Company defines Adjusted EBITDA attributable to Parsons Corporation as Adjusted EBITDA excluding Adjusted EBITDA attributable to noncontrolling interests. The Company defines Adjusted EBITDA as net income (loss) attributable to Parsons Corporation, adjusted to include net income (loss) attributable to noncontrolling interests and to exclude interest expense (net of interest income), provision for income taxes, depreciation and amortization and certain other items that are not considered in the evaluation of ongoing operating performance. These other items include net income (loss) attributable to noncontrolling interests, asset impairment charges, income and expense recognized on litigation matters, expenses incurred in connection with acquisitions and other non-recurring transaction costs and expenses related to our prior restructuring. The following table summarizes business segment Adjusted EBITDA and a reconciliation to net income attributable to Parsons Corporation for the periods presented (in thousands):
|  | 2017 |  |  | 2018 |  |  | 2019 |
Adjusted EBITDA attributable to Parsons Corporation |  |  |  |  |  |  |  |  |  |  |  |
Federal Solutions |  | $ | 95,354 |  |  | $ | 121,986 |  |  | $ | 169,100 |
Critical Infrastructure |  |  | 99,402 |  |  |  | 106,851 |  |  |  | 138,851 |
Adjusted EBITDA attributable to Parsons Corporation |  |  | 194,756 |  |  |  | 228,837 |  |  |  | 307,951 |
Adjusted EBITDA attributable to noncontrolling interests |  |  | 14,891 |  |  |  | 17,407 |  |  |  | 17,096 |
Depreciation and amortization |  |  | (35,198 | ) |  |  | (69,869 | ) |  |  | (125,700 | )
Interest expense, net |  |  | (13,333 | ) |  |  | (18,132 | ) |  |  | (22,429 | )
Income tax (expense) benefit |  |  | (21,464 | ) |  |  | (20,367 | ) |  |  | 69,886 |
Litigation-related expenses (a) |  |  | (10,026 | ) |  |  | 129,674 |  |  |  | — |
Amortization of deferred gain resulting from sale-leaseback transactions (b) |  |  | 7,283 |  |  |  | 7,253 |  |  |  | — |
Equity-based compensation (c) |  |  | (19,016 | ) |  |  | (16,487 | ) |  |  | (65,744 | )
Transaction-related costs (d) |  |  | (1,190 | ) |  |  | (12,942 | ) |  |  | (34,353 | )
Restructuring (e) |  |  | — |  |  |  | — |  |  |  | (3,424 | )
Other (f) |  |  | (5,166 | ) |  |  | (5,938 | ) |  |  | (6,155 | )
Net income including noncontrolling interests |  | $ | 111,537 |  |  | $ | 239,436 |  |  | $ | 137,128 |
Net income attributable to noncontrolling interests |  |  | (14,211 | ) |  |  | (17,099 | ) |  |  | (16,594 | )
Net income attributable to Parsons Corporation |  | $ | 97,326 |  |  | $ | 222,337 |  |  | $ | 120,534 |
(a) | Fiscal 2017 reflects post-judgment interest expense recorded in “(Interest and other expense) gain associated with claim on long-term contract” in our results of operations related to a judgment entered against the Company in 2014 in connection with a lawsuit against a joint venture in which the Company is the managing partner. Fiscal 2018 reflects a reversal of an accrued liability, with $55.1 million recorded to revenue and $74.6 million recorded to other income in our results of operations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K for a description of this matter, which was resolved in favor of the Company on June 13, 2018.
(b) | Reflects recognized deferred gains related to sales-leaseback transactions described in “Note 10— Sale-Leasebacks.”
(c) | Reflects equity-based compensation costs primarily related to cash-settled awards. 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.
(c) | Reflects costs incurred in connection with acquisitions, IPO, and other non-recurring transaction costs, primarily fees paid for professional services and employee retention.
(d) | Reflects costs associated with 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.
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):
|  | 2017 |  |  | 2018 |  |  | 2019 |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |
North America |  | $ | 2,374,138 |  |  | $ | 2,870,494 |  |  | $ | 3,249,054 |
Middle East |  |  | 621,796 |  |  |  | 671,925 |  |  |  | 689,067 |
Rest of World |  |  | 21,077 |  |  |  | 18,089 |  |  |  | 16,691 |
Total revenues |  | $ | 3,017,011 |  |  | $ | 3,560,508 |  |  | $ | 3,954,812 |
Property and equipment, net |  |  |  |  |  |  |  |  |  |  |  |
North America |  | $ | 80,852 |  |  | $ | 86,847 |  |  | $ | 117,606 |
Middle East |  |  | 6,726 |  |  |  | 5,002 |  |  |  | 5,145 |
Total property and equipment, net |  | $ | 87,578 |  |  | $ | 91,849 |  |  | $ | 122,751 |
North America revenue includes $2.1 billion, $2.6 billion and $3.0 billion of United States revenue for the years ended December 29, 2017, December 31, 2018 and December 31, 2019, respectively. North America property and equipment, net includes $76.2 million, $79.9 million and $109.9 million of property and equipment, net in the United States at December 29, 2017, December 31, 2018 and December 31, 2019, respectively. The geographic location of revenue is determined by the location of the customer. The prior reporting of revenue by geographic location has been conformed to the current presentation. The following table presents revenues by business lines (in thousands):
|  | 2017 |  |  | 2018 |  |  | 2019 |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |
Federal Solutions |  |  |  |  |  |  |  |  |  |  |  |
Cyber & Intelligence |  | $ | 184,771 |  |  | $ | 255,447 |  |  | $ | 351,828 |
Defense |  |  | 291,358 |  |  |  | 431,059 |  |  |  | 577,109 |
Mission Solutions |  |  | 291,933 |  |  |  | 360,969 |  |  |  | 317,802 |
Engineered Systems |  |  | 311,844 |  |  |  | 431,532 |  |  |  | 497,793 |
Geospatial |  |  | — |  |  |  | — |  |  |  | 143,375 |
Federal Solutions revenues |  |  | 1,079,906 |  |  |  | 1,479,007 |  |  |  | 1,887,907 |
Critical Infrastructure |  |  |  |  |  |  |  |  |  |  |  |
Connected Communities |  |  | 602,975 |  |  |  | 656,513 |  |  |  | 619,220 |
Mobility Solutions |  |  | 1,102,725 |  |  |  | 1,183,863 |  |  |  | 1,120,563 |
Industrial |  |  | 231,405 |  |  |  | 241,125 |  |  |  | 327,122 |
Critical Infrastructure revenues |  |  | 1,937,105 |  |  |  | 2,081,501 |  |  |  | 2,066,905 |
Total revenues |  | $ | 3,017,011 |  |  | $ | 3,560,508 |  |  | $ | 3,954,812 |
Revenue for the year ended December 28, 2018 included $55.1 million related to the settlement of a claim that was resolved in favor of the Company in the Mobility Solutions business line of our Critical Infrastructure segment. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K for a description of this matter, which was resolved in favor of the Company on June 13, 2018. Excluding the claim settlement, revenue for the year ended December 31, 2018 for the Critical Infrastructure segment was $2.0 billion and for the Mobility Solutions revenue business line revenue was $1.1 billion.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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