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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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76-0207995
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(State or other jurisdiction
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(I.R.S. Employer Identification No.)
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of incorporation or organization)
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17021 Aldine Westfield Road, Houston, Texas
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77073-5101
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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Emerging growth company
o
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(Do not check if a smaller reporting company)
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Page No
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Three Months Ended June 30,
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Six Months Ended June 30,
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||||||||||||
(In millions, except per share amounts)
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2017
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2016
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2017
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2016
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||||||||
Revenue:
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||||||||
Sales
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$
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1,002
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$
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954
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$
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1,957
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$
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1,967
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Services
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1,402
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1,454
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2,709
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3,111
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Total revenue
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2,404
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2,408
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4,666
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5,078
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Costs and expenses:
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Cost of sales
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893
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1,182
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1,668
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2,126
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Cost of services
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1,191
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1,930
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2,304
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3,644
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Research and engineering
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102
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99
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201
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201
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Marketing, general and administrative
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225
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222
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409
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429
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Impairment and restructuring charges
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—
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1,126
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90
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1,286
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Goodwill impairment
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—
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1,841
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—
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1,841
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Merger and related costs, net
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49
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78
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80
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180
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Merger termination fee
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—
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(3,500
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)
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—
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(3,500
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)
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Total costs and expenses
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2,460
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2,978
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4,752
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6,207
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Operating loss
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(56
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)
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(570
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)
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(86
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)
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(1,129
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)
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Loss on early extinguishment of debt
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—
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(142
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)
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—
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(142
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)
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Interest expense, net
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(30
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)
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(48
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(65
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(103
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)
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Loss before income tax and equity in loss of affiliate
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(86
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(760
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)
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(151
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(1,374
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)
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Equity in loss of affiliate
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(21
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)
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—
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(39
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)
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—
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Income tax provision
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(72
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)
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(152
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)
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(119
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)
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(519
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)
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Net loss
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(179
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)
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(912
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)
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(309
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)
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(1,893
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)
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Net loss attributable to noncontrolling interests
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—
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1
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1
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1
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Net loss attributable to Baker Hughes, a GE company, LLC
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$
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(179
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)
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$
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(911
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)
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$
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(308
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)
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$
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(1,892
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)
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Basic and diluted loss per share attributable to Baker Hughes, a GE company, LLC
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$
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(0.42
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)
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$
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(2.08
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)
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$
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(0.72
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)
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$
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(4.30
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)
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Cash dividends per share
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$
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0.17
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$
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0.17
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$
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0.34
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$
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0.34
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Three Months Ended June 30,
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Six Months Ended June 30,
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(In millions)
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2017
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2016
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2017
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2016
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Net loss
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$
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(179
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)
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$
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(912
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$
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(309
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)
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$
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(1,893
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)
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Other comprehensive income (loss):
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Foreign currency translation adjustments
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36
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(25
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59
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40
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Pension and other postretirement benefits
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(7
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12
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(8
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14
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Other comprehensive income (loss)
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29
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(13
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51
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54
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Comprehensive loss
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(150
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)
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(925
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)
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(258
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)
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(1,839
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)
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Comprehensive loss attributable to noncontrolling interests
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—
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1
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1
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1
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Comprehensive loss attributable to Baker Hughes, a GE company, LLC
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$
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(150
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$
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(924
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$
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(257
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)
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$
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(1,838
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)
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(In millions)
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June 30,
2017 |
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December 31,
2016 |
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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4,133
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$
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4,572
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Accounts receivable - less allowance for doubtful accounts
(2017 - $367; 2016 - $509)
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2,307
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2,251
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Inventories, net
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1,976
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1,809
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Other current assets
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675
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535
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Total current assets
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9,091
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9,167
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Property, plant and equipment - less accumulated depreciation
(2017 - $6,576; 2016 - $6,567)
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4,047
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4,271
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Goodwill
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4,088
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4,084
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Intangible assets, net
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282
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318
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Other assets
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1,167
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1,194
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Total assets
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$
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18,675
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$
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19,034
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LIABILITIES AND EQUITY
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Current liabilities:
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Accounts payable
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$
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1,094
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$
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1,027
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Short-term debt and current portion of long-term debt
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331
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132
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Accrued employee compensation
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456
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566
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Other accrued liabilities
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585
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579
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Total current liabilities
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2,466
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2,304
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Long-term debt
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2,678
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2,886
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Deferred income taxes and other tax liabilities
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344
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328
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Liabilities for pensions and other postretirement benefits
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647
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626
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Other liabilities
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153
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153
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Commitments and contingencies
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Equity:
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Common stock, one dollar par value
(shares authorized - 750; issued and outstanding: 2017 - 426; 2016 - 424)
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427
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425
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Capital in excess of par value
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6,793
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6,708
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Retained earnings
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6,129
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6,583
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Accumulated other comprehensive loss
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(982
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)
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(1,033
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)
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Treasury stock
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(60
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)
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(27
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)
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Baker Hughes, a GE company, LLC stockholders' equity
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12,307
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12,656
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Noncontrolling interests
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80
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|
|
81
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|
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Total equity
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12,387
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|
|
12,737
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Total liabilities and equity
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$
|
18,675
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|
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$
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19,034
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Baker Hughes, a GE company, LLC Stockholders' Equity
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||||||||||||||||||||||
(In millions, except per share amounts)
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Common Stock
|
|
Capital
in Excess
of
Par Value
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Treasury Stock
|
|
Non-controlling
Interests
|
|
Total Equity
|
||||||||||||||
Balance at December 31, 2016
|
$
|
425
|
|
|
$
|
6,708
|
|
|
$
|
6,583
|
|
|
$
|
(1,033
|
)
|
|
$
|
(27
|
)
|
|
$
|
81
|
|
|
$
|
12,737
|
|
Comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
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Net loss
|
|
|
|
|
(308
|
)
|
|
|
|
|
|
(1
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)
|
|
(309
|
)
|
|||||||||||
Other comprehensive income
|
|
|
|
|
|
|
51
|
|
|
|
|
|
|
51
|
|
||||||||||||
Stock plan activity
|
2
|
|
|
32
|
|
|
|
|
|
|
(33
|
)
|
|
|
|
1
|
|
||||||||||
Stock-based compensation
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
59
|
|
||||||||||||
Cash dividends ($0.34 per share)
|
|
|
|
|
(146
|
)
|
|
|
|
|
|
|
|
(146
|
)
|
||||||||||||
Net activity related to noncontrolling interests
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
(6
|
)
|
||||||||||||
Balance at June 30, 2017
|
$
|
427
|
|
|
$
|
6,793
|
|
|
$
|
6,129
|
|
|
$
|
(982
|
)
|
|
$
|
(60
|
)
|
|
$
|
80
|
|
|
$
|
12,387
|
|
|
Baker Hughes, a GE company, LLC Stockholders' Equity
|
|
|
|
|
||||||||||||||||||||||
(In millions, except per share amounts)
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Common Stock
|
|
Capital
in Excess
of
Par Value
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Treasury Stock
|
|
Non-controlling
Interests
|
|
Total Equity
|
||||||||||||||
Balance at December 31, 2015
|
$
|
437
|
|
|
$
|
7,261
|
|
|
$
|
9,614
|
|
|
$
|
(1,005
|
)
|
|
$
|
(9
|
)
|
|
$
|
84
|
|
|
$
|
16,382
|
|
Comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net loss
|
|
|
|
|
(1,892
|
)
|
|
|
|
|
|
(1
|
)
|
|
(1,893
|
)
|
|||||||||||
Other comprehensive income
|
|
|
|
|
|
|
54
|
|
|
|
|
|
|
54
|
|
||||||||||||
Stock plan activity
|
2
|
|
|
13
|
|
|
|
|
|
|
(12
|
)
|
|
|
|
3
|
|
||||||||||
Repurchase and retirement of common stock
|
(11
|
)
|
|
(489
|
)
|
|
|
|
|
|
|
|
|
|
(500
|
)
|
|||||||||||
Stock-based compensation
|
|
|
68
|
|
|
|
|
|
|
|
|
|
|
68
|
|
||||||||||||
Cash dividends ($0.34 per share)
|
|
|
|
|
(148
|
)
|
|
|
|
|
|
|
|
(148
|
)
|
||||||||||||
Balance at June 30, 2016
|
$
|
428
|
|
|
$
|
6,853
|
|
|
$
|
7,574
|
|
|
$
|
(951
|
)
|
|
$
|
(21
|
)
|
|
$
|
83
|
|
|
$
|
13,966
|
|
|
Six Months Ended June 30,
|
||||||
(In millions)
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(309
|
)
|
|
$
|
(1,893
|
)
|
Adjustments to reconcile net loss to net cash flows from operating activities:
|
|
|
|
||||
Depreciation and amortization
|
434
|
|
|
659
|
|
||
Impairment of assets
|
19
|
|
|
1,055
|
|
||
Goodwill impairment
|
—
|
|
|
1,841
|
|
||
Inventory write-down
|
—
|
|
|
587
|
|
||
Loss on early extinguishment of debt
|
—
|
|
|
142
|
|
||
Provision for deferred income taxes
|
20
|
|
|
238
|
|
||
Provision for doubtful accounts
|
(111
|
)
|
|
215
|
|
||
Other noncash items
|
15
|
|
|
(23
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(3
|
)
|
|
742
|
|
||
Inventories
|
(139
|
)
|
|
347
|
|
||
Accounts payable
|
57
|
|
|
(385
|
)
|
||
Other operating items, net
|
(210
|
)
|
|
(47
|
)
|
||
Net cash flows (used in) provided by operating activities
|
(227
|
)
|
|
3,478
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Expenditures for capital assets
|
(216
|
)
|
|
(156
|
)
|
||
Proceeds from disposal of assets
|
134
|
|
|
139
|
|
||
Proceeds from sale of investment securities
|
103
|
|
|
204
|
|
||
Purchases of investment securities
|
(72
|
)
|
|
(276
|
)
|
||
Net cash flows used in investing activities
|
(51
|
)
|
|
(89
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Net repayments of short-term debt and other borrowings
|
(10
|
)
|
|
(36
|
)
|
||
Repayment of long-term debt
|
—
|
|
|
(1,135
|
)
|
||
Repurchase of common stock
|
—
|
|
|
(500
|
)
|
||
Dividends paid
|
(146
|
)
|
|
(148
|
)
|
||
Other financing items, net
|
(4
|
)
|
|
14
|
|
||
Net cash flows used in financing activities
|
(160
|
)
|
|
(1,805
|
)
|
||
Effect of foreign exchange rate changes on cash and cash equivalents
|
(1
|
)
|
|
2
|
|
||
(Decrease) increase in cash and cash equivalents
|
(439
|
)
|
|
1,586
|
|
||
Cash and cash equivalents, beginning of period
|
4,572
|
|
|
2,324
|
|
||
Cash and cash equivalents, end of period
|
$
|
4,133
|
|
|
$
|
3,910
|
|
Supplemental cash flows disclosures:
|
|
|
|
||||
Income taxes paid, net of refunds
|
$
|
120
|
|
|
$
|
213
|
|
Interest paid
|
$
|
92
|
|
|
$
|
129
|
|
Supplemental disclosure of noncash investing activities:
|
|
|
|
||||
Capital expenditures included in accounts payable
|
$
|
28
|
|
|
$
|
22
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Long-lived asset impairment charges
|
June 30, 2017
|
|
June 30, 2016
|
|
June 30, 2017
|
|
June 30, 2016
|
||||||||
Machinery and equipment
|
$
|
—
|
|
|
$
|
240
|
|
|
$
|
—
|
|
|
$
|
346
|
|
Intangible assets
|
—
|
|
|
89
|
|
|
—
|
|
|
101
|
|
||||
Total long-lived asset impairment charges
|
$
|
—
|
|
|
$
|
329
|
|
|
$
|
—
|
|
|
$
|
447
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Restructuring charges
|
June 30, 2017
|
|
June 30, 2016
|
|
June 30, 2017
|
|
June 30, 2016
|
||||||||
Global Cost Reduction and Restructuring
|
$
|
—
|
|
|
$
|
797
|
|
|
$
|
21
|
|
|
$
|
839
|
|
2017 Oilfield Restructuring
|
—
|
|
|
—
|
|
|
69
|
|
|
—
|
|
||||
Total restructuring charges
|
$
|
—
|
|
|
$
|
797
|
|
|
$
|
90
|
|
|
$
|
839
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2017
|
|
June 30, 2016
|
|
June 30, 2017
|
|
June 30, 2016
|
||||||||
Workforce reductions
|
$
|
—
|
|
|
$
|
98
|
|
|
$
|
3
|
|
|
$
|
145
|
|
Contract terminations
|
—
|
|
|
91
|
|
|
7
|
|
|
91
|
|
||||
Impairment of fixed assets
|
—
|
|
|
608
|
|
|
11
|
|
|
603
|
|
||||
Total restructuring charges
|
$
|
—
|
|
|
$
|
797
|
|
|
$
|
21
|
|
|
$
|
839
|
|
•
|
Initiated workforce reductions that resulted in the elimination of approximately
3,000
positions worldwide and recorded a charge for severance expense of
$98 million
.
|
•
|
Canceled a supply contract and certain equipment leases and recorded a charge of
$91 million
for contract termination costs.
|
•
|
Adjustments were made to align our capacity to expected future operational levels and strategy and as a result, we recognized an impairment related to excess machinery and equipment. In addition, we consolidated and closed certain facilities, primarily in North America. These actions resulted in an impairment charges of
$608 million
.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
|
June 30, 2017
|
|
June 30, 2017
|
||||
Workforce reductions
|
$
|
—
|
|
|
$
|
58
|
|
Other
|
—
|
|
|
11
|
|
||
Total restructuring charges
|
$
|
—
|
|
|
$
|
69
|
|
|
Three Months Ended
|
|
|
Five Months Ended
|
|||
|
May 31, 2017
|
|
May 31, 2017
|
||||
Revenue
|
$
|
265
|
|
|
$
|
365
|
|
Gross profit (loss)
|
(30
|
)
|
|
(58
|
)
|
||
Net loss
|
(45
|
)
|
|
(84
|
)
|
||
Net loss attributable to BHGE LLC
|
(21
|
)
|
|
(39
|
)
|
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||
|
June 30, 2017
|
|
June 30, 2016
|
||||||||||||
Segments
|
Revenue
|
|
Operating Profit (Loss) Before Tax
|
|
Revenue
|
|
Operating Profit (Loss) Before Tax
|
||||||||
North America
|
$
|
778
|
|
|
$
|
14
|
|
|
$
|
668
|
|
|
$
|
(311
|
)
|
Latin America
|
208
|
|
|
12
|
|
|
235
|
|
|
(243
|
)
|
||||
Europe/Africa/Russia Caspian
|
504
|
|
|
15
|
|
|
581
|
|
|
(257
|
)
|
||||
Middle East/Asia Pacific
|
661
|
|
|
63
|
|
|
651
|
|
|
(142
|
)
|
||||
Industrial Services
|
253
|
|
|
(8
|
)
|
|
273
|
|
|
(43
|
)
|
||||
Total Operations
|
2,404
|
|
|
96
|
|
|
2,408
|
|
|
(996
|
)
|
||||
Corporate
(1)
|
—
|
|
|
(103
|
)
|
|
—
|
|
|
(29
|
)
|
||||
Loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(142
|
)
|
||||
Interest expense, net
|
—
|
|
|
(30
|
)
|
|
—
|
|
|
(48
|
)
|
||||
Impairment and restructuring charges
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,126
|
)
|
||||
Goodwill impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,841
|
)
|
||||
Merger and related costs, net
|
—
|
|
|
(49
|
)
|
|
—
|
|
|
(78
|
)
|
||||
Merger termination fee
|
—
|
|
|
—
|
|
|
—
|
|
|
3,500
|
|
||||
Total
|
$
|
2,404
|
|
|
$
|
(86
|
)
|
|
$
|
2,408
|
|
|
$
|
(760
|
)
|
(1)
|
For the three months ended June 30, 2017, corporate expenses include charges for litigation and other related matters of
$67 million
.
|
|
Six Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2017
|
|
June 30, 2016
|
||||||||||||
Segments
|
Revenue
|
|
Operating Profit (Loss) Before Tax
|
|
Revenue
|
|
Operating Profit (Loss) Before Tax
|
||||||||
North America
|
$
|
1,490
|
|
|
$
|
(9
|
)
|
|
$
|
1,487
|
|
|
$
|
(536
|
)
|
Latin America
|
409
|
|
|
96
|
|
|
512
|
|
|
(309
|
)
|
||||
Europe/Africa/Russia Caspian
|
965
|
|
|
16
|
|
|
1,192
|
|
|
(276
|
)
|
||||
Middle East/Asia Pacific
|
1,322
|
|
|
135
|
|
|
1,369
|
|
|
(93
|
)
|
||||
Industrial Services
|
480
|
|
|
(14
|
)
|
|
518
|
|
|
(47
|
)
|
||||
Total Operations
|
4,666
|
|
|
224
|
|
|
5,078
|
|
|
(1,261
|
)
|
||||
Corporate
(1)
|
—
|
|
|
(140
|
)
|
|
—
|
|
|
(61
|
)
|
||||
Loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(142
|
)
|
||||
Interest expense, net
|
—
|
|
|
(65
|
)
|
|
—
|
|
|
(103
|
)
|
||||
Impairment and restructuring charges
|
—
|
|
|
(90
|
)
|
|
—
|
|
|
(1,286
|
)
|
||||
Goodwill impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,841
|
)
|
||||
Merger and related costs, net
|
—
|
|
|
(80
|
)
|
|
—
|
|
|
(180
|
)
|
||||
Merger termination fee
|
—
|
|
|
—
|
|
|
—
|
|
|
3,500
|
|
||||
Total
|
$
|
4,666
|
|
|
$
|
(151
|
)
|
|
$
|
5,078
|
|
|
$
|
(1,374
|
)
|
(1)
|
For the six months ended June 30, 2017, corporate expenses include charges for litigation and other related matters of
$67 million
.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Weighted average common shares outstanding for basic and diluted loss per share
|
429
|
|
|
438
|
|
|
429
|
|
|
440
|
|
|
|
|
|
|
|
|
|
||||
Anti-dilutive shares excluded from diluted loss per share
(1)
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Future potentially dilutive shares excluded from diluted loss per share
(2)
|
2
|
|
|
6
|
|
|
2
|
|
|
7
|
|
(1)
|
The calculation of diluted loss per share for the three and six months ended June 30, 2017 excludes shares potentially issuable under stock-based incentive compensation plans and the employee stock purchase plan, as their effect, if included, would have been anti-dilutive.
|
(2)
|
Options where the exercise price exceeds the average market price are excluded from the calculation of diluted net loss or earnings per share because their effect would be anti-dilutive.
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Finished goods
|
$
|
1,735
|
|
|
$
|
1,607
|
|
Work in process
|
134
|
|
|
105
|
|
||
Raw materials
|
107
|
|
|
97
|
|
||
Total inventories
|
$
|
1,976
|
|
|
$
|
1,809
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Less:
Accumulated
Amortization
|
|
Net
|
|
Gross
Carrying
Amount
|
|
Less:
Accumulated
Amortization
|
|
Net
|
||||||||||||
Technology
|
$
|
526
|
|
|
$
|
286
|
|
|
$
|
240
|
|
|
$
|
527
|
|
|
$
|
267
|
|
|
$
|
260
|
|
Customer relationships
|
68
|
|
|
36
|
|
|
32
|
|
|
74
|
|
|
31
|
|
|
43
|
|
||||||
Trade names
|
19
|
|
|
12
|
|
|
7
|
|
|
90
|
|
|
79
|
|
|
11
|
|
||||||
Other
|
17
|
|
|
14
|
|
|
3
|
|
|
17
|
|
|
13
|
|
|
4
|
|
||||||
Total intangible assets
|
$
|
630
|
|
|
$
|
348
|
|
|
$
|
282
|
|
|
$
|
708
|
|
|
$
|
390
|
|
|
$
|
318
|
|
Year
|
Estimated Amortization Expense
|
||
Remainder of 2017
|
$
|
26
|
|
2018
|
48
|
|
|
2019
|
46
|
|
|
2020
|
38
|
|
|
2021
|
32
|
|
|
2022
|
29
|
|
|
U.S. Pension Benefits
|
|
Non-U.S. Pension Benefits
|
|
Other Postretirement Benefits
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
Service cost
|
$
|
10
|
|
|
$
|
13
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
7
|
|
|
7
|
|
|
5
|
|
|
7
|
|
|
1
|
|
|
1
|
|
||||||
Expected return on plan assets
|
(10
|
)
|
|
(10
|
)
|
|
(8
|
)
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service credit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||||
Amortization of net actuarial loss
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic cost
|
$
|
9
|
|
|
$
|
12
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
U.S. Pension Benefits
|
|
Non-U.S. Pension Benefits
|
|
Other Postretirement Benefits
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
Service cost
|
$
|
20
|
|
|
$
|
26
|
|
|
$
|
6
|
|
|
$
|
7
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Interest cost
|
14
|
|
|
14
|
|
|
11
|
|
|
14
|
|
|
2
|
|
|
2
|
|
||||||
Expected return on plan assets
|
(20
|
)
|
|
(20
|
)
|
|
(17
|
)
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service credit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||
Amortization of net actuarial loss
|
4
|
|
|
5
|
|
|
4
|
|
|
3
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic cost
|
$
|
18
|
|
|
$
|
25
|
|
|
$
|
4
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Pensions and Other Postretirement Benefits
|
Foreign Currency Translation Adjustments
|
Accumulated Other Comprehensive Loss
|
||||||||||||
Balance at December 31, 2016
|
|
$
|
(284
|
)
|
|
|
$
|
(749
|
)
|
|
|
$
|
(1,033
|
)
|
|
Other comprehensive income (loss) before reclassifications
|
|
(11
|
)
|
|
|
59
|
|
|
|
48
|
|
|
|||
Amounts reclassified from accumulated other comprehensive loss
|
|
4
|
|
|
|
—
|
|
|
|
4
|
|
|
|||
Deferred taxes
|
|
(1
|
)
|
|
|
—
|
|
|
|
(1
|
)
|
|
|||
Balance at June 30, 2017
|
|
$
|
(292
|
)
|
|
|
$
|
(690
|
)
|
|
|
$
|
(982
|
)
|
|
|
Pensions and Other Postretirement Benefits
|
Foreign Currency Translation Adjustments
|
Accumulated Other Comprehensive Loss
|
||||||||||||
Balance at December 31, 2015
|
|
$
|
(261
|
)
|
|
|
$
|
(744
|
)
|
|
|
$
|
(1,005
|
)
|
|
Other comprehensive income before reclassifications
|
|
11
|
|
|
|
40
|
|
|
|
51
|
|
|
|||
Amounts reclassified from accumulated other comprehensive loss
|
|
4
|
|
|
|
—
|
|
|
|
4
|
|
|
|||
Deferred taxes
|
|
(1
|
)
|
|
|
—
|
|
|
|
(1
|
)
|
|
|||
Balance at June 30, 2016
|
|
$
|
(247
|
)
|
|
|
$
|
(704
|
)
|
|
|
$
|
(951
|
)
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Brent oil price ($/Bbl)
(1)
|
$
|
50.13
|
|
|
$
|
46.01
|
|
|
$
|
52.07
|
|
|
$
|
40.26
|
|
WTI oil price ($/Bbl)
(2)
|
48.11
|
|
|
45.53
|
|
|
49.89
|
|
|
39.62
|
|
||||
Natural gas price ($/mmBtu)
(3)
|
3.05
|
|
|
2.14
|
|
|
3.01
|
|
|
2.05
|
|
(1)
|
Bloomberg Dated Brent ("Brent") Oil Spot Price per Barrel
|
(2)
|
Bloomberg West Texas Intermediate ("WTI") Cushing Crude Oil Spot Price per Barrel
|
(3)
|
Bloomberg Henry Hub Natural Gas Spot Price per million British Thermal Unit
|
|
Three Months Ended June 30,
|
|
$
Change
|
|
%
Change
|
|
Six Months Ended June 30,
|
|
$
Change
|
|
%
Change
|
||||||||||||||||||
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
North America
|
$
|
778
|
|
|
$
|
668
|
|
|
$
|
110
|
|
|
16
|
%
|
|
$
|
1,490
|
|
|
$
|
1,487
|
|
|
$
|
3
|
|
|
—
|
%
|
Latin America
|
208
|
|
|
235
|
|
|
(27
|
)
|
|
(11
|
%)
|
|
409
|
|
|
512
|
|
|
(103
|
)
|
|
(20
|
%)
|
||||||
Europe/Africa/Russia Caspian
|
504
|
|
|
581
|
|
|
(77
|
)
|
|
(13
|
%)
|
|
965
|
|
|
1,192
|
|
|
(227
|
)
|
|
(19
|
%)
|
||||||
Middle East/Asia Pacific
|
661
|
|
|
651
|
|
|
10
|
|
|
2
|
%
|
|
1,322
|
|
|
1,369
|
|
|
(47
|
)
|
|
(3
|
%)
|
||||||
Industrial Services
|
253
|
|
|
273
|
|
|
(20
|
)
|
|
(7
|
%)
|
|
480
|
|
|
518
|
|
|
(38
|
)
|
|
(7
|
%)
|
||||||
Total
|
$
|
2,404
|
|
|
$
|
2,408
|
|
|
$
|
(4
|
)
|
|
—
|
%
|
|
$
|
4,666
|
|
|
$
|
5,078
|
|
|
$
|
(412
|
)
|
|
(8
|
%)
|
|
Three Months Ended June 30,
|
|
$
Change
|
|
%
Change
|
|
Six Months Ended June 30,
|
|
$
Change
|
|
%
Change
|
||||||||||||||||||
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||||||||||||||||||
Operating Profit (Loss) Before Tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
North America
|
$
|
14
|
|
|
$
|
(311
|
)
|
|
$
|
325
|
|
|
105
|
%
|
|
$
|
(9
|
)
|
|
$
|
(536
|
)
|
|
$
|
527
|
|
|
98
|
%
|
Latin America
|
12
|
|
|
(243
|
)
|
|
255
|
|
|
105
|
%
|
|
96
|
|
|
(309
|
)
|
|
405
|
|
|
131
|
%
|
||||||
Europe/Africa/Russia Caspian
|
15
|
|
|
(257
|
)
|
|
272
|
|
|
106
|
%
|
|
16
|
|
|
(276
|
)
|
|
292
|
|
|
106
|
%
|
||||||
Middle East/Asia Pacific
|
63
|
|
|
(142
|
)
|
|
205
|
|
|
144
|
%
|
|
135
|
|
|
(93
|
)
|
|
228
|
|
|
245
|
%
|
||||||
Industrial Services
|
(8
|
)
|
|
(43
|
)
|
|
35
|
|
|
81
|
%
|
|
(14
|
)
|
|
(47
|
)
|
|
33
|
|
|
70
|
%
|
||||||
Total Operations
|
96
|
|
|
(996
|
)
|
|
1,092
|
|
|
110
|
%
|
|
224
|
|
|
(1,261
|
)
|
|
1,485
|
|
|
118
|
%
|
||||||
Corporate
(1)
|
(103
|
)
|
|
(29
|
)
|
|
(74
|
)
|
|
255
|
%
|
|
(140
|
)
|
|
(61
|
)
|
|
(79
|
)
|
|
130
|
%
|
||||||
Loss on early extinguishment of debt
|
—
|
|
|
(142
|
)
|
|
142
|
|
|
(100
|
%)
|
|
—
|
|
|
(142
|
)
|
|
142
|
|
|
(100
|
%)
|
||||||
Interest expense, net
|
(30
|
)
|
|
(48
|
)
|
|
18
|
|
|
(38
|
%)
|
|
(65
|
)
|
|
(103
|
)
|
|
38
|
|
|
(37
|
%)
|
||||||
Impairment and restructuring charges
|
—
|
|
|
(1,126
|
)
|
|
1,126
|
|
|
(100
|
%)
|
|
(90
|
)
|
|
(1,286
|
)
|
|
1,196
|
|
|
(93
|
%)
|
||||||
Goodwill impairment
|
—
|
|
|
(1,841
|
)
|
|
1,841
|
|
|
(100
|
%)
|
|
—
|
|
|
(1,841
|
)
|
|
1,841
|
|
|
(100
|
%)
|
||||||
Merger and related
costs, net
|
(49
|
)
|
|
(78
|
)
|
|
29
|
|
|
(37
|
%)
|
|
(80
|
)
|
|
(180
|
)
|
|
100
|
|
|
(56
|
%)
|
||||||
Merger termination fee
|
—
|
|
|
3,500
|
|
|
(3,500
|
)
|
|
(100
|
%)
|
|
—
|
|
|
3,500
|
|
|
(3,500
|
)
|
|
(100
|
%)
|
||||||
Loss Before Income Taxes and Equity in Loss of Affiliate
|
$
|
(86
|
)
|
|
$
|
(760
|
)
|
|
$
|
674
|
|
|
89
|
%
|
|
$
|
(151
|
)
|
|
$
|
(1,374
|
)
|
|
$
|
1,223
|
|
|
89
|
%
|
(1)
|
For the three and six months ended June 30, 2017, corporate expenses include charges for litigation and other related matters of $67 million.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||||||||||
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Revenue
|
$
|
2,404
|
|
|
100
|
%
|
|
$
|
2,408
|
|
|
100
|
%
|
|
$
|
4,666
|
|
|
100
|
%
|
|
$
|
5,078
|
|
|
100
|
%
|
Cost of revenue
|
2,084
|
|
|
87
|
%
|
|
3,112
|
|
|
129
|
%
|
|
3,972
|
|
|
85
|
%
|
|
5,770
|
|
|
114
|
%
|
||||
Research and engineering
|
102
|
|
|
4
|
%
|
|
99
|
|
|
4
|
%
|
|
201
|
|
|
4
|
%
|
|
201
|
|
|
4
|
%
|
||||
Marketing, general and administrative
|
225
|
|
|
9
|
%
|
|
222
|
|
|
9
|
%
|
|
409
|
|
|
9
|
%
|
|
429
|
|
|
8
|
%
|
||||
Impairment and restructuring charges
|
—
|
|
|
—
|
%
|
|
1,126
|
|
|
47
|
%
|
|
90
|
|
|
2
|
%
|
|
1,286
|
|
|
25
|
%
|
||||
Goodwill Impairment
|
—
|
|
|
—
|
%
|
|
1,841
|
|
|
76
|
%
|
|
—
|
|
|
—
|
%
|
|
1,841
|
|
|
36
|
%
|
||||
Merger and related costs, net
|
49
|
|
|
2
|
%
|
|
78
|
|
|
3
|
%
|
|
80
|
|
|
2
|
%
|
|
180
|
|
|
4
|
%
|
(In millions)
|
2017
|
|
2016
|
||||
Operating activities
|
$
|
(227
|
)
|
|
$
|
3,478
|
|
Investing activities
|
(51
|
)
|
|
(89
|
)
|
||
Financing activities
|
(160
|
)
|
|
(1,805
|
)
|
Period
|
Total Number of Shares Purchased
(1)
|
|
Average
Price Paid
Per Share
(1)
|
|
Total Number of Shares Purchased as Part of a Publicly Announced Program
(2)
|
|
Maximum Dollar Value
of Shares that May Yet Be
Purchased Under the Program
(3)
|
|||||
April 1-30, 2017
|
1,724
|
|
|
$
|
58.90
|
|
|
—
|
|
$
|
1,237,161,230
|
|
May 1-31, 2017
|
87
|
|
|
$
|
58.76
|
|
|
—
|
|
$
|
1,237,161,230
|
|
June 1-30, 2017
|
—
|
|
|
$
|
—
|
|
|
—
|
|
$
|
1,237,161,230
|
|
Total
|
1,811
|
|
|
$
|
58.89
|
|
|
—
|
|
|
|
(1)
|
Represents shares purchased from employees to satisfy the tax withholding obligations in connection with the vesting of restricted stock awards and restricted stock units.
|
(2)
|
There were no repurchases during the second quarter of 2017 under our previously announced purchase program. Under the transaction agreement with GE, as described in "Note 2. General Electric Transaction Agreement" of the Notes to the Unaudited Condensed Consolidated Financial Statements, we had agreed not to repurchase any shares of our common stock other than in connection with shares repurchased from employees to satisfy the tax withholding obligations in connection with the vesting of equity awards while the transaction was pending.
|
(3)
|
Following the Transactions, BHGE and the Company do not have an equity repurchase program.
|
2.1
|
|
Transaction Agreement and Plan of Merger, dated as of October 30, 2016, among General Electric Company, Baker Hughes Incorporated, Bear Newco, Inc. and Bear MergerSub, Inc. (filed as Exhibit 2.1 to Current Report of Baker Hughes, a GE company, LLC on Form 8-K filed November 1, 2016).
|
2.2
|
|
Amendment dated as of March 27, 2017, to the Transaction Agreement and Plan of Merger, dated as of October 30, 2016, entered into among General Electric Company, Baker Hughes Incorporated, Bear Newco, Inc., Bear MergerSub, Inc., BHI Newco, Inc. and Bear MergerSub 2, Inc. (filed as Exhibit 2.1 to the Current Report of Baker Hughes Incorporated on Form 8-K filed on March 31, 2017).
|
3.1
|
|
Certificate of Conversion of Baker Hughes, a GE company, LLC (filed as Exhibit 3.1 to the Current Report of Baker Hughes, a GE company, LLC on Form 8-K filed on July 3, 2017).
|
3.2
|
|
Certificate of Formation of Baker Hughes, a GE company, LLC (filed as Exhibit 3.2 to the Current Report of Baker Hughes, a GE company LLC on Form 8-K filed on July 3, 2017).
|
3.3
|
|
Amended and Restated Operating Agreement of Baker Hughes, a GE company, LLC, dated as of July 3, 2017 (filed as Exhibit 3.3 to the Current Report of Baker Hughes, a GE company, LLC on Form 8-K filed on July 3, 2017).
|
4.1
|
|
Second Supplemental Indenture to the Indenture dated as of October 28, 2008, among Baker Hughes, a GE company, LLC, Baker Hughes Co-Obligor, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (filed as Exhibit 4.1 to the Current Report of Baker Hughes, a GE company, LLC on Form 8-K filed on July 3, 2017).
|
4.2
|
|
First Supplemental Indenture to the Indenture dated as of May 15, 1991, among Baker Hughes, a GE company, LLC, Baker Hughes Co-Obligor, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (filed as Exhibit 4.2 to the Current Report of Baker Hughes, a GE company, LLC on Form 8-K filed on July 3, 2017).
|
4.3
|
|
Sixth Supplemental Indenture to the Indenture dated as of June 8, 2006, among Baker Hughes, a GE company, LLC, Baker Hughes Co-Obligor, Inc., Baker Hughes Oilfield Operations, LLC, Baker Hughes International Branches, LLC and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.3 to the Current Report of Baker Hughes, a GE company, LLC on Form 8-K filed on July 3, 2017).
|
4.4
|
|
First Supplemental Indenture to the Indenture dated as of May 15, 1994, among Baker Hughes, a GE company, LLC, Baker Hughes Co-Obligor, Inc., Baker Hughes Oilfield Operations, LLC, Baker Hughes International Branches, LLC and The Bank of New York Mellon Trust Company, N.A., as trustee (filed as Exhibit 4.4 to the Current Report of Baker Hughes, a GE company, LLC on Form 8-K filed on July 3, 2017).
|
10.1
|
|
Exchange Agreement, dated as of July 3, 2017, among General Electric Company, GE Oil & Gas US Holdings I, Inc., GE Oil & Gas US Holdings IV, Inc., GE Holdings (US), Inc., Baker Hughes, a GE company and Baker Hughes, a GE company, LLC (filed as Exhibit 10.1 to the Current Report of Baker Hughes, a GE company, LLC on Form 8-K filed on July 3, 2017).
|
10.2
|
|
Tax Matters Agreement, dated as of July 3, 2017, among General Electric Company, Baker Hughes, a GE company, EHHC Newco, LLC and Baker Hughes, a GE company, LLC (filed as Exhibit 10.2 to the Current Report of Baker Hughes, a GE company, LLC on Form 8-K filed on July 3, 2017).
|
10.3
|
|
IP Cross License Agreement, dated as of July 3, 2017, between General Electric Company and Baker Hughes, a GE company, LLC (filed as Exhibit 10.5 to the Current Report of Baker Hughes, a GE company, LLC on Form 8-K filed on July 3, 2017).
|
10.4
|
|
Trademark License Agreement, dated as of July 3, 2017, between General Electric Company and Baker Hughes, a GE company, LLC (filed as Exhibit 10.6 to the Current Report of Baker Hughes, a GE company, LLC on Form 8-K filed on July 3, 2017).
|
10.5
|
|
GE Digital Master Products and Services Agreement, dated as of July 3, 2017, between GE Digital LLC and Baker Hughes, a GE company, LLC (filed as Exhibit 10.7 to the Current Report of Baker Hughes, a GE company, LLC on Form 8-K filed on July 3, 2017).
|
10.6
|
|
Intercompany Services Agreement, dated as of July 3, 2017, between General Electric Company and Baker Hughes, a GE company, LLC (filed as Exhibit 10.8 to the Current Report of Baker Hughes, a GE company, LLC on Form 8-K filed on July 3, 2017).
|
10.7
|
|
Supply Agreement, dated as of July 3, 2017, between General Electric Company, as Seller, and Baker Hughes, a GE company, LLC, as Buyer (filed as Exhibit 10.9 to the Current Report of Baker Hughes, a GE company, LLC on Form 8-K filed on July 3, 2017).
|
10.8
|
|
Supply Agreement, dated as of July 3, 2017, between Baker Hughes, a GE company, LLC, as Seller, and General Electric Company, as Buyer (filed as Exhibit 10.10 to the Current Report of Baker Hughes, a GE company, LLC on Form 8-K filed on July 3, 2017).
|
10.9
|
|
Credit Agreement, dated as of July 3, 2017, among Baker Hughes, a GE company, LLC, JPMorgan Chase Bank, as Administrative Agent, and the Lenders party thereto (filed as Exhibit 10.11 to the Current Report of Baker Hughes, a GE company, LLC on Form 8-K filed on July 3, 2017).
|
10.10
|
|
Non-Competition Agreement, dated as of July 3, 2017, between General Electric Company and Baker Hughes, a GE company (filed as Exhibit 10.3 to the Current Report of Baker Hughes, a GE company, LLC on Form 8-K filed on July 3, 2017).
|
10.11
|
|
Channel Agreement, dated as of July 3, 2017, between General Electric Company and Baker Hughes, a GE company (filed as Exhibit 10.4 to the Current Report of Baker Hughes, a GE company, LLC on Form 8-K filed on July 3, 2017).
|
31.1**
|
|
Certification of Lorenzo Simonelli, President and Chief Executive Officer, furnished pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
|
31.2**
|
|
Certification of Brian Worrell, Chief Financial Officer, furnished pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
|
32**
|
|
Statement of Lorenzo Simonelli, President and Chief Executive Officer, and Brian Worrell, Chief Financial Officer, furnished pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended.
|
95*
|
|
Mine Safety Disclosure.
|
101.INS*
|
|
XBRL Instance Document
|
101.SCH*
|
|
XBRL Schema Document
|
101.CAL*
|
|
XBRL Calculation Linkbase Document
|
101.LAB*
|
|
XBRL Label Linkbase Document
|
101.PRE*
|
|
XBRL Presentation Linkbase Document
|
101.DEF*
|
|
XBRL Definition Linkbase Document
|
|
|
BAKER HUGHES, A GE COMPANY, LLC
(Registrant)
|
|
|
|
|
|
Date:
|
July 28, 2017
|
By:
|
/s/ BRIAN WORRELL
|
|
|
Brian Worrell
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
Date:
|
July 28, 2017
|
By:
|
/s/ KURT CAMILLERI
|
|
|
Kurt Camilleri
|
|
|
|
Vice President, Controller and Chief Accounting Officer
|
|
|
|
||
Date:
|
July 28, 2017
|
By:
|
/s/ Lorenzo Simonelli
|
|
|
|
|
Lorenzo Simonelli
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
||
Date:
|
July 28, 2017
|
By:
|
/s/ Brian Worrell
|
|
|
|
|
Brian Worrell
|
|
|
|
|
Chief Financial Officer
|
|
|
|
(i)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(ii)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Lorenzo Simonelli
|
|
|
Name:
|
|
Lorenzo Simonelli
|
|
|
Title:
|
|
President and Chief Executive Officer
|
|
|
Date:
|
|
July 28, 2017
|
|
|
|
|
|
|
|
|
|
/s/ Brian Worrell
|
|
|
Name:
|
|
Brian Worrell
|
|
|
Title:
|
|
Chief Financial Officer
|
|
|
Date:
|
|
July 28, 2017
|
Mine or Operating Name/MSHA
Identification Number |
Section
104 S&S Citations |
Section
104(b) Orders |
Section
104(d) Citations and Orders |
Section
110(b)(2) Violations |
Section
107(a) Orders |
Proposed
MSHA Assessments (1) |
Mining
Related Fatalities |
Received
Notice of Pattern of Violations Under Section 104(e) (yes/no) |
Received
Notice of Potential to Have Pattern Under Section 104(e) (yes/no) |
Legal
Actions Pending as of Last Day of Period |
Legal
Actions Initiated During Period |
Legal
Actions Resolved During Period |
||
Morgan City Grinding Plant/1601357
|
0
|
0
|
0
|
0
|
0
|
$
|
—
|
|
0
|
N
|
N
|
0
|
0
|
0
|
Argenta Mine and Mill/2601152
|
0
|
0
|
0
|
0
|
0
|
$
|
—
|
|
0
|
N
|
N
|
0
|
0
|
0
|
Corpus Christi Grinding Plant/4103112
|
0
|
0
|
0
|
0
|
0
|
$
|
—
|
|
0
|
N
|
N
|
0
|
0
|
0
|
(1)
|
Amounts included are the total dollar value of proposed assessments received from MSHA during the
three months ended June 30, 2017
, regardless of whether the assessment has been challenged or appealed. Citations and orders can be contested and appealed, and as part of that process, are sometimes reduced in severity and amount, and sometimes dismissed. The number of citations, orders, and proposed assessments vary by inspector and also vary depending on the size and type of the operation.
|