Booz Allen Hamilton Holding Corp

13. Supplemental Condensed Consolidated Financial Information

Severance and Related Charges

The Company incurs costs related to employee severance and related charges including stock-based compensation, employee benefits and payroll taxes related to employees terminated pursuant to cost management initiatives. The Company records these costs when it is probable that employees will be entitled to termination benefits and the amounts can be reasonably estimated.

The Company’s cost management initiative and restructuring of the Civil business in the first quarter of fiscal 2026 resulted in $36 million of severance and related expenses. In the third quarter of fiscal 2026, the Company began actions to reduce costs as a result of the slowed procurement and funding environment. For the three months ended December 31, 2025, the Company recorded severance and related charges of $25 million related to this initiative. Severance and related charges included in the condensed consolidated statements of operations for the three and nine months ended December 31, 2025, are summarized below:

The unpaid portion of these severance and related charges is included in accrued compensation and benefits in the condensed consolidated balance sheet and consisted of the following at the period presented below:

Divestiture

On November 30, 2025, the Company completed a transaction for the sale of a group of contracts, as well as the assets and liabilities associated with those contracts and the workforce that provides services under those contracts. As a result of this transaction, the Company recognized a pre-tax gain of $7 million which is reflected in other income (expense), on the condensed consolidated statement of operations. The consideration for the sale is subject to customary working capital adjustments and contingent consideration, which may impact the amount of the gain ultimately recognized.