Delaware
|
|
76-0207995
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
17021 Aldine Westfield Road, Houston, Texas
|
|
77073-5101
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
|
Name of each exchange on which registered
|
5.125% Senior Notes due 2040
|
|
New York Stock Exchange
|
Large accelerated filer
o
|
Accelerated filer
o
|
Non-accelerated filer
þ
|
Smaller reporting company
o
|
Emerging growth company
o
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
We have market-leading product companies focused on reducing product and service costs, while improving equipment efficiency and reliability to reduce total project spend.
|
•
|
We strive to create value through integrated offerings by reducing the number of interfaces as we deliver projects and services. This reduces complexity, drives speed
,
and increases execution efficiency, and
|
•
|
We plan to continue to develop fullstream opportunities that drive value creation through improvements in total cost reduction and productivity increases for the industry.
|
•
|
Complete fullstream portfolio
.
Leading portfolio of products, services and expertise capable of serving upstream, midstream/liquefied natural gas (LNG) and downstream sectors of the oil and gas industry, matching oilfield service and equipment leaders in many areas. We deliver across the value chain through our four product companies: Oilfield Services; Oilfield Equipment; Turbomachinery & Process Solutions; and Digital Solutions, as discussed below under "Products and Services, and each are among the top four providers in their respective segments.
|
•
|
Technology
.
We have a culture built on a heritage of innovation and invention in research and development, with complementary capabilities. Technology remains a differentiator for us, and a key enabler to drive the efficiency and productivity gains our customers need. We also have a range of technologies that support our customers efforts to reduce their carbon footprint. We remain committed to investing in our products and services to maintain our leadership position across our offerings, including $700 million research & development spend in 2018.
|
•
|
Digital capabilities
.
We expect to be able to continue to develop software offerings on any operating platform, for new and extended applications in the oil and gas and other industrial ecosystems, such as machine and equipment health, reliability management and maintenance optimization.
|
•
|
The severity and duration of both the summer and the winter in North America can have a significant impact on activity levels. In Canada, the timing and duration of the spring thaw directly affects activity levels, which reach seasonal lows during the second quarter and build through the third and fourth quarters to a seasonal high in the first quarter.
|
•
|
Adverse weather conditions, such as hurricanes in the Gulf of Mexico, may interrupt or curtail our coastal and offshore drilling, or our customers’ operations, cause supply disruptions and result in a loss of revenue and damage to our equipment and facilities, which may or may not be insured.
|
•
|
Severe weather during the winter months normally results in reduced activity levels in the North Sea and Russia generally in the first quarter and may interrupt or curtail our operations, or our customers’ operations, in those areas and result in a loss of revenue.
|
•
|
Scheduled repair and maintenance of offshore facilities in the North Sea can reduce activity in the second and third quarters.
|
•
|
Many of our international oilfield customers increase orders for certain products and services in the fourth quarter.
|
•
|
Our process & pipeline business in the DS segment typically experiences lower sales during the first and fourth quarters of the year due to the Northern Hemisphere winter.
|
•
|
Our broader DS business typically experiences higher customer activity as a result of spending patterns in the second half of the year.
|
Name
|
|
Age
|
|
Position and Background
|
Lorenzo Simonelli
|
|
45
|
|
President and Chief Executive Officer
Lorenzo Simonelli has been the Chief Executive Officer of the Company since July 2017. Before joining the Company in July 2017, Mr. Simonelli was Senior Vice President, GE and President and Chief Executive Officer, GE Oil & Gas from October 2013 to July 2017. Before joining GE Oil & Gas, he was the President and Chief Executive Officer of GE Transportation from July 2008 to October 2013. Mr. Simonelli joined GE in 1994 and held various finance and leadership roles from 1994 to 2008.
|
Brian Worrell
|
|
49
|
|
Chief Financial Officer
Brian Worrell is the Chief Financial Officer of the Company. Prior to joining the Company in July 2017, he served as Vice President and Chief Financial Officer of GE Oil & Gas from January 2014 to July 2017. He previously held the position of Vice President, Financial Planning & Analysis for GE from 2010 to January 2014 and Vice President Corporate Audit Staff for GE from 2006 to 2010.
|
Maria Claudia Borras
|
|
50
|
|
President, Oilfield Services
Maria Claudia Borras is the President and Chief Executive Officer, Oilfield Services of the Company. Before joining the Company in July 2017, she served as the Chief Commercial Officer of GE Oil & Gas from December 2014 to July 2017. Prior to joining GE Oil & Gas, she held various leadership positions at Baker Hughes Incorporated including President, Latin America from October 2013 to January 2015, President Europe Region from August 2011 to October 2013, Vice President, Global Marketing from May 2009 to July 2011 and other leadership roles at Baker Hughes Incorporated from 1994 to April 2009.
|
Kurt Camilleri
|
|
44
|
|
Vice President, Controller and Chief Accounting Officer
Kurt Camilleri is the Vice President, Controller and Chief Accounting Officer of the Company. Prior to joining the Company in July 2017, he served as the Global Controller for GE Oil & Gas from July 2013 to July 2017. Mr. Camilleri served as the Global Controller for GE Transportation from January 2013 to June 2013 and the Controller for Europe and Eastern and African Growth Markets for GE Healthcare from 2010 to January 2013. He began his career in 1996 with Pricewaterhouse in London, which subsequently became PricewaterhouseCoopers.
|
Roderick Christie
|
|
56
|
|
President, Turbomachinery and Process Solutions
Rod Christie is the President and Chief Executive Officer of Turbomachinery & Process Solutions of the Company. Prior to joining the Company in July 2017, he served as the Chief Executive Officer of Turbomachinery & Process Solutions at GE Oil & Gas from January 2016 to July 2017. He served as the Chief Executive Officer of GE Oil & Gas’ Subsea Systems & Drilling Business from August 2011 to 2016 and held various other leadership positions within GE between 1999 to 2011.
|
Name
|
|
Age
|
|
Position and Background
|
Matthias Heilmann
|
|
50
|
|
President, Digital Solutions
Matthias Heilmann is the President and Chief Executive Officer of Digital Solutions of the Company. Prior to joining the Company in July 2017, he served as the Chief Digital Officer, President & Chief Executive Officer of Digital Solutions within GE Oil & Gas from 2016 through July 2017. Prior to joining GE Oil & Gas, he led ABB’s Global Product Group Enterprise Software business from June 2014 to January 2016. He served as the Chief Operating Officer of Ryerson Holding Corporation from March 2010 until January 2012 and served as Executive Vice President and Chief Operating Officer of Ryerson Inc. from January 2009 to January 2012.
|
William D. Marsh
|
|
56
|
|
Chief Legal Officer
William D. Marsh is the Chief Legal Officer of the Company. Prior to joining the Company in July 2017, he served as the Vice President and General Counsel of Baker Hughes Incorporated from February 2013 to July 2017. He previously served as the Vice President-Legal for Western Hemisphere at Baker Hughes Incorporated from May 2009 to February 2013 and held various executive, legal and corporate roles within Baker Hughes Incorporated from 1998 to 2009.
|
Derek Mathieson
|
|
48
|
|
Chief Marketing and Technology Officer
Derek Mathieson is the Chief Marketing and Technology Officer of the Company. Prior to joining the Company in July 2017, he served in various leadership roles at Baker Hughes Incorporated including Chief Integration Officer from October 2016 to July 2017; Chief Commercial Officer from May 2016 to October 2016; Chief Technology and Marketing Officer from September 2015 to May 2016; Chief Strategy Officer from October 2013 to September 2015; President Western Hemisphere Operations from 2012 to 2013; President, Products and Technology from May 2009 to January 2012; and Chief Technology and Marketing Officer from December 2008 to May 2009.
|
Neil Saunders
|
|
49
|
|
President, Oilfield Equipment
Neil Saunders is the President and Chief Executive Officer of Oilfield Equipment of the Company. Prior to joining the Company in July 2017, he served as the President and Chief Executive Officer of the Subsea Systems & Drilling business at GE Oil & Gas from July 2016 to July 2017 and the Senior Vice President for Subsea Production Systems from August 2011 to July 2016. He served in various leadership roles within GE Oil & Gas from 2007 to August 2011.
|
Uwem Ukpong
|
|
47
|
|
Chief Global Operations Officer
Uwem Ukpong is the Chief Global Operations Officer of the Company. Prior to this role, he served as the Chief Integration Officer of the Company from July 2017 to January 2018. He served as Vice President, Baker Hughes Integration for GE Oil & Gas from October 2016 to July 2017 and President and CEO of the GE Oil & Gas Surface Business from January 2016 to October 2016. He held various technical and leadership roles at Schlumberger from 1993 to 2015.
|
•
|
we may not be able to continue to obtain insurance on commercially reasonable terms;
|
•
|
we may be faced with types of liabilities that will not be covered by our insurance;
|
•
|
our insurance carriers may not be able to meet their obligations under the policies; or
|
•
|
the dollar amount of any liabilities may exceed our policy limits.
|
Oilfield Services:
|
|
Houston, Pasadena, and The Woodlands, Texas; Broken Arrow and Claremore, Oklahoma - all located in the United States; Leduc, Canada; Celle, Germany; Tananger, Norway; Aberdeen, Scotland; Liverpool, England; Macae, Brazil; Singapore, Singapore; Kakinada, India; Nimr, Oman; Abu Dhabi and Dubai, United Arab Emirates; Dhahran, Saudi Arabia; Luanda, Angola; Port Harcourt, Nigeria
|
|
|
|
Oilfield Equipment:
|
|
Houston and Humble, Texas - located in the United States; Montrose, Scotland; Nailsea, England; Niteroi, Brazil; Suzhou, China; Dammam, Saudi Arabia
|
|
|
|
Turbomachinery & Process Solutions:
|
|
Deer Park, Texas and Jacksonville, Florida - located in the United States; Florence and Massa, Italy; Le Creusot, France; Coimbatore, India
|
|
|
|
Digital Solutions:
|
|
Billerica, Massachusetts and Minden, Nevada - located in the United States; Groby, England; Shannon, Ireland; Hurth, Germany
|
|
Year Ended December 31,
(1)
|
||||||||||||||
(In millions, except per unit amounts)
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Revenue
|
$
|
22,877
|
|
$
|
17,179
|
|
$
|
13,082
|
|
$
|
16,688
|
|
$
|
19,191
|
|
|
|
|
|
|
|
||||||||||
Cost of revenue
|
18,891
|
|
14,143
|
|
10,150
|
|
12,193
|
|
14,256
|
|
|||||
Selling, general and administrative
|
2,699
|
|
2,535
|
|
1,926
|
|
2,115
|
|
2,288
|
|
|||||
Restructuring, impairment and other
(2)
|
433
|
|
412
|
|
516
|
|
411
|
|
189
|
|
|||||
Goodwill impairment
(3)
|
—
|
|
—
|
|
—
|
|
2,080
|
|
—
|
|
|||||
Merger and related costs
(4)
|
153
|
|
373
|
|
33
|
|
27
|
|
67
|
|
|||||
Operating income (loss)
|
701
|
|
(284
|
)
|
457
|
|
(138
|
)
|
2,391
|
|
|||||
Other non operating income, net
|
202
|
|
80
|
|
3
|
|
100
|
|
124
|
|
|||||
Interest expense, net
|
(223
|
)
|
(131
|
)
|
(102
|
)
|
(120
|
)
|
(179
|
)
|
|||||
Income (loss) before income taxes and equity in loss of affiliate
|
680
|
|
(335
|
)
|
358
|
|
(158
|
)
|
2,336
|
|
|||||
Equity in loss of affiliate
|
(139
|
)
|
(11
|
)
|
—
|
|
—
|
|
—
|
|
|||||
Income tax provision
|
(402
|
)
|
(146
|
)
|
(173
|
)
|
(473
|
)
|
(484
|
)
|
|||||
Net income (loss)
|
139
|
|
(492
|
)
|
185
|
|
(631
|
)
|
1,852
|
|
|||||
Less: Net income (loss) attributable to noncontrolling interests
|
19
|
|
7
|
|
(69
|
)
|
(25
|
)
|
12
|
|
|||||
Net income (loss) attributable to Baker Hughes, a GE company, LLC
|
$
|
120
|
|
$
|
(499
|
)
|
$
|
254
|
|
$
|
(606
|
)
|
$
|
1,840
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
||||||||||
Cash distribution per common unit
|
$
|
0.72
|
|
$
|
0.35
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
||||||||||
Cash, cash equivalents and restricted cash
(5)
|
$
|
3,677
|
|
$
|
7,026
|
|
$
|
981
|
|
$
|
1,432
|
|
$
|
1,390
|
|
Total assets
|
52,234
|
|
56,336
|
|
21,466
|
|
23,133
|
|
26,496
|
|
|||||
Long-term debt
|
6,285
|
|
6,312
|
|
38
|
|
13
|
|
14
|
|
|||||
Total equity
|
34,876
|
|
38,396
|
|
14,280
|
|
14,545
|
|
16,386
|
|
(1)
|
The current year results are not comparable to prior years as the results of Baker Hughes are included only from July 3, 2017. Additionally we adopted FASB ASU No. 2014-09,
Revenue from Contracts with Customers
, and the related amendments with effect from January 1, 2016 on a full retrospective basis. Accordingly, the 2016, 2017 and 2018 fiscal year periods are presented under the new revenue standard and the 2014 and 2015 periods are not presented under the new revenue standard.
|
(2)
|
See "Note 18. Restructuring, Impairment and Other" of the Notes to Consolidated and Combined Financial Statements in Item 8 herein for further discussion.
|
(3)
|
In performing the annual impairment test for goodwill in the third quarter of 2015 using data as of July 1 of that year, we determined that a step two test was required for a reporting unit within our OFS operating segment. As a consequence of the continued pressure on oil prices, the revised expected cash flows for this reporting unit resulted in a goodwill impairment charge of $2,080 million
|
(4)
|
See "Note 3. Business Acquisition and Disposition" of the Notes to Consolidated and Combined Financial Statements in Item 8 herein for further discussion of merger and related costs.
|
(5)
|
Cash, cash equivalents and restricted cash includes
$747 million
and
$997 million
of cash held on behalf of GE at
December 31, 2018
and
2017
, respectively.
|
•
|
North America onshore activity: in 2018, we experienced an acceleration in rig count growth, as compared to 2017, driven by the increase in commodity prices for the first 10 months of the year. In the fourth quarter, WTI prices declined 38% driven by both increased supply and geo-political events. We expect the decline in commodity prices may have a negative impact on activity in North America in 2019.
|
•
|
International onshore activity: we have seen a moderate increase in rig count activity in 2018 and expect growth to continue into 2019, at a slightly increased rate. We have seen signs of improvement with the increase in commodity prices, but due to continued volatility, we remain cautious as to growth expectations.
|
•
|
Offshore projects: although commodity prices have been volatile, we have begun to see increasing customer activity on offshore projects and more final investment decisions being made. Subsea tree awards increased in 2018, and we expect tree awards to be roughly flat in 2019, though still at levels significantly below prior 2012 and 2013 peaks. We expect customers to continue to evaluate the timing of final investment decisions, and in light of increased commodity price volatility, there may be some project delays.
|
•
|
Liquefied Natural Gas (LNG) projects: we remain optimistic on the LNG market. While currently oversupplied, we believe a significant number of final investment decisions are needed to fill the projected supply-demand imbalance in the early to middle part of the next decade. In 2018, we saw positive final investment decisions for new LNG capacity. We continue to view the long-term economics of the LNG industry as positive given our outlook for supply and demand.
|
•
|
Refinery, petrochemical and industrial projects: in refining, we believe large, complex refineries should gain advantage in a more competitive, oversupplied landscape in 2019 as the industry globalizes and refiners position to meet local demand and secure export potential. In petrochemicals, we continue to see healthy demand and cost-advantaged supply driving projects forward in 2019. The industrial market continues to grow as outdated infrastructure is replaced, policy changes come into effect and power is decentralized. We continue to see growing demand across these markets in 2019.
|
|
2018
|
|
2017
|
|
2016
|
||||||
Brent oil prices ($/Bbl)
(1)
|
$
|
71.34
|
|
|
$
|
54.12
|
|
|
$
|
43.64
|
|
WTI oil prices ($/Bbl)
(2)
|
65.23
|
|
|
50.80
|
|
|
43.29
|
|
|||
Natural gas prices ($/mmBtu)
(3)
|
3.15
|
|
|
2.99
|
|
|
2.52
|
|
(1)
|
Energy Information Administration (EIA) Europe Brent Spot Price per Barrel
|
(2)
|
EIA Cushing, OK WTI (West Texas Intermediate) spot price
|
(3)
|
EIA Henry Hub Natural Gas Spot Price per million British Thermal Unit
|
|
2018
|
|
2017
|
|
2016
|
|||
North America
|
1,223
|
|
|
1,082
|
|
|
642
|
|
International
|
988
|
|
|
948
|
|
|
956
|
|
Worldwide
|
2,211
|
|
|
2,030
|
|
|
1,598
|
|
|
Year Ended December 31,
|
$ Change
|
|||||||||||||
|
2018
|
2017
|
2016
|
From 2017 to 2018
|
From 2016 to 2017
|
||||||||||
Revenue:
|
|
|
|
|
|
||||||||||
Oilfield Services
|
$
|
11,617
|
|
$
|
5,881
|
|
$
|
788
|
|
$
|
5,736
|
|
$
|
5,093
|
|
Oilfield Equipment
|
2,641
|
|
2,661
|
|
3,540
|
|
(20
|
)
|
(879
|
)
|
|||||
Turbomachinery & Process Solutions
|
6,015
|
|
6,295
|
|
6,668
|
|
(280
|
)
|
(373
|
)
|
|||||
Digital Solutions
|
2,604
|
|
2,342
|
|
2,086
|
|
262
|
|
256
|
|
|||||
Total
|
$
|
22,877
|
|
$
|
17,179
|
|
$
|
13,082
|
|
$
|
5,698
|
|
$
|
4,097
|
|
|
Year Ended December 31,
|
$ Change
|
|||||||||||||
|
2018
|
2017
|
2016
|
From 2017 to 2018
|
From 2016 to 2017
|
||||||||||
Segment operating income (loss):
|
|
|
|
|
|
||||||||||
Oilfield Services
|
$
|
785
|
|
$
|
67
|
|
$
|
(207
|
)
|
$
|
718
|
|
$
|
274
|
|
Oilfield Equipment
|
—
|
|
26
|
|
305
|
|
(26
|
)
|
(279
|
)
|
|||||
Turbomachinery & Process Solutions
|
621
|
|
665
|
|
1,058
|
|
(44
|
)
|
(393
|
)
|
|||||
Digital Solutions
|
390
|
|
357
|
|
363
|
|
33
|
|
(6
|
)
|
|||||
Total segment operating income
|
1,796
|
|
1,115
|
|
1,519
|
|
681
|
|
(404
|
)
|
|||||
Corporate
|
(405
|
)
|
(370
|
)
|
(375
|
)
|
(35
|
)
|
5
|
|
|||||
Inventory impairment and related charges
(1)
|
(105
|
)
|
(244
|
)
|
(138
|
)
|
139
|
|
(106
|
)
|
|||||
Restructuring, impairment and other
|
(433
|
)
|
(412
|
)
|
(516
|
)
|
(21
|
)
|
104
|
|
|||||
Merger and related costs
|
(153
|
)
|
(373
|
)
|
(33
|
)
|
220
|
|
(340
|
)
|
|||||
Operating income (loss)
|
701
|
|
(284
|
)
|
457
|
|
985
|
|
(741
|
)
|
|||||
Other non operating income, net
|
202
|
|
80
|
|
3
|
|
122
|
|
77
|
|
|||||
Interest expense, net
|
(223
|
)
|
(131
|
)
|
(102
|
)
|
(92
|
)
|
(29
|
)
|
|||||
Income (loss) before income taxes and equity in loss of affiliate
|
680
|
|
(335
|
)
|
358
|
|
1,015
|
|
(693
|
)
|
|||||
Equity in loss of affiliate
|
(139
|
)
|
(11
|
)
|
—
|
|
(128
|
)
|
(11
|
)
|
|||||
Provision for income taxes
|
(402
|
)
|
(146
|
)
|
(173
|
)
|
(256
|
)
|
27
|
|
|||||
Net income (loss)
|
$
|
139
|
|
$
|
(492
|
)
|
$
|
185
|
|
$
|
631
|
|
$
|
(677
|
)
|
(1)
|
Inventory impairments and related charges are reported in the "Cost of goods sold" caption of the consolidated and combined statements of income (loss). 2017 includes
$87 million
of adjustments to write-up the acquired inventory to its estimated fair value on acquisition of Baker Hughes as this inventory was used or sold in the six months ended December 31, 2017.
|
•
|
Comprehensive internal policies over such areas as anti-bribery; travel, entertainment, gifts and charitable donations connected to government officials; payments to commercial sales representatives; and, the use of non-U.S. police or military organizations for security purposes. In addition, there are country-specific guidance for customs standards, visa processing, export and re-export controls, economic sanctions and antiboycott laws.
|
•
|
Global structure of Legal Compliance Counsel and Professionals providing compliance advice, customized training, investigations, and governance, across all regions and countries where we do business.
|
•
|
Comprehensive employee compliance training program that combines instructor-led and web-based training modules tailored to the key risks that employees face on an ongoing basis.
|
•
|
Due diligence procedures for commercial sales agents, administrative service providers, and professional consultants, and an enhanced risk-based process for classifying channel partners and suppliers.
|
•
|
Due diligence procedures for merger and acquisition activities.
|
•
|
Specifically tailored compliance risk assessments focused on country and third party risk.
|
•
|
Compliance Review Board comprised of senior officers of the Company that meets quarterly to monitor effectiveness of the Compliance Program, as well as Product Company and regional compliance committees that meet quarterly.
|
•
|
Technology to monitor and report on compliance matters, including an internal investigations management system, a web-based antiboycott reporting tool and global trade management systems.
|
•
|
A compliance program designed to create an “Open Reporting Environment” where employees are encouraged to report any ethics or compliance matter without fear of retaliation, including a global network of trained employee ombudspersons, and a worldwide, 24-hour business helpline operated by a third party and available in 150 languages.
|
•
|
Centralized finance organization with company-wide policies.
|
•
|
Anti-corruption audits of high-risk countries conducted by Legal Compliance and Internal Audit, as well as risk based compliance audits of third parties conducted by Legal Compliance.
|
•
|
A centralized human resources function, including locally compliant processes and procedures for management of HR related issues, including implementation of locally compliant standards for pre-hire screening of employees; a process to screen existing employees prior to promotion to select roles where they may be exposed to finance and/or corruption-related risks; and implementation of a global new hire compliance training module for all employees.
|
(In millions)
|
2018
|
2017
|
2016
|
||||||
Operating activities
|
$
|
1,738
|
|
$
|
(798
|
)
|
$
|
262
|
|
Investing activities
|
(578
|
)
|
(4,123
|
)
|
(472
|
)
|
|||
Financing activities
|
(4,381
|
)
|
10,914
|
|
(102
|
)
|
|
Payments Due by Period
|
||||||||||||||||||
(In millions)
|
Total
|
|
Less Than
1 Year
|
|
1 - 3
Years
|
|
4 - 5
Years
|
|
More Than
5 Years
|
||||||||||
Total debt and capital lease obligations
(1)
|
$
|
6,989
|
|
|
$
|
942
|
|
|
$
|
562
|
|
|
$
|
1,272
|
|
|
$
|
4,213
|
|
Estimated interest payments
(2)
|
3,716
|
|
|
239
|
|
|
473
|
|
|
404
|
|
|
2,600
|
|
|||||
Operating leases
(3)
|
846
|
|
|
186
|
|
|
262
|
|
|
132
|
|
|
266
|
|
|||||
Purchase obligations
(4)
|
1,507
|
|
|
1,388
|
|
|
86
|
|
|
25
|
|
|
8
|
|
|||||
Total
|
$
|
13,058
|
|
|
$
|
2,755
|
|
|
$
|
1,383
|
|
|
$
|
1,833
|
|
|
$
|
7,087
|
|
(1)
|
Amounts represent the expected cash payments for the principal amounts related to our debt, including capital lease obligations. Amounts for debt do not include any deferred issuance costs or unamortized discounts or premiums including step up in the value of the debt on the acquisition of Baker Hughes. Expected cash payments for interest are excluded from these amounts. Total debt and capital lease obligations includes
$896 million
payable to GE and its affiliates. As there is no fixed payment schedule on the amount payable to GE and its affiliates we have classified it as payable in less than one year.
|
(2)
|
Amounts represent the expected cash payments for interest on our long-term debt and capital lease obligations.
|
(3)
|
Amounts represent the future minimum payments under noncancelable operating leases with initial or remaining terms of one year or more. We enter into operating leases, some of which include renewal options, however, we have excluded renewal options from the table above unless it is anticipated that we will exercise such renewals.
|
(4)
|
Purchase obligations include expenditures for capital assets for 2019 as well as agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.
|
•
|
A non-U.S. affiliate of BHGE received five purchase orders and attributed €31.4 million ($36.0 million) in gross revenues and €8.6 million ($9.9 million) in net profits related to the sale of valves and parts for industrial machinery and equipment used in gas plants, petrochemical plants and gas production projects in Iran.
|
•
|
A second non-U.S. affiliate of BHGE received 12 purchase orders and attributed €0.1 million ($0.1 million) in gross revenues and less than €0.1 million ($0.1 million) in net profits to the sale of valves and other spare parts for use in the petrochemical industry in Iran.
|
•
|
A third non-U.S. affiliate of BHGE attributed €0.3 million ($0.3 million) in gross revenues and €0.1 million ($0.1 million) in net profits to transactions involving the sale of films used in the inspection of pipelines in Iran.
|
(In millions)
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
(2)
|
||||||||||||||
As of December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Long-term debt
(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
513
|
|
|
$
|
1,250
|
|
|
$
|
—
|
|
|
$
|
4,188
|
|
|
$
|
5,951
|
|
Weighted average interest rates
|
—
|
%
|
|
—
|
%
|
|
2.49
|
%
|
|
2.88
|
%
|
|
—
|
%
|
|
3.90
|
%
|
|
3.57
|
%
|
(1)
|
Fair market value of our fixed rate long-term debt, excluding capital leases, was $5.6 billion at
December 31, 2018
.
|
(2)
|
Amounts represent the principal value of our long-term debt outstanding and related weighted average interest rates at the end of the respective period.
|
/s/ LORENZO SIMONELLI
Lorenzo Simonelli
President and
Chief Executive Officer
|
|
/s/ BRIAN WORRELL
Brian Worrell
Chief Financial Officer
|
|
/s/ KURT CAMILLERI
Kurt Camilleri
Vice President, Controller and Chief Accounting Officer
|
|
Year Ended December 31,
|
||||||||
(In millions, except per unit amounts)
|
2018
|
2017
|
2016
|
||||||
Revenue:
|
|
|
|
|
|||||
Sales of goods
|
$
|
13,113
|
|
$
|
11,062
|
|
$
|
9,462
|
|
Sales of services
|
9,764
|
|
6,117
|
|
3,620
|
|
|||
Total revenue
|
22,877
|
|
17,179
|
|
13,082
|
|
|||
Costs and expenses:
|
|
|
|
|
|||||
Cost of goods sold
|
11,524
|
|
9,486
|
|
7,829
|
|
|||
Cost of services sold
|
7,367
|
|
4,657
|
|
2,321
|
|
|||
Selling, general and administrative expenses
|
2,699
|
|
2,535
|
|
1,926
|
|
|||
Restructuring, impairment and other
|
433
|
|
412
|
|
516
|
|
|||
Merger and related costs
|
153
|
|
373
|
|
33
|
|
|||
Total costs and expenses
|
22,176
|
|
17,463
|
|
12,625
|
|
|||
Operating income (loss)
|
701
|
|
(284
|
)
|
457
|
|
|||
Other non operating income, net
|
202
|
|
80
|
|
3
|
|
|||
Interest expense, net
|
(223
|
)
|
(131
|
)
|
(102
|
)
|
|||
Income (loss) before income taxes and equity in loss of affiliate
|
680
|
|
(335
|
)
|
358
|
|
|||
Equity in loss of affiliate
|
(139
|
)
|
(11
|
)
|
—
|
|
|||
Provision for income taxes
|
(402
|
)
|
(146
|
)
|
(173
|
)
|
|||
Net income (loss)
|
139
|
|
(492
|
)
|
185
|
|
|||
Less: Net income (loss) attributable to noncontrolling interests
|
19
|
|
7
|
|
(69
|
)
|
|||
Net income (loss) attributable to Baker Hughes, a GE company, LLC
|
$
|
120
|
|
$
|
(499
|
)
|
$
|
254
|
|
|
|
|
|
||||||
|
|
|
|
||||||
Cash distribution per common unit
|
$
|
0.72
|
|
$
|
0.35
|
|
|
|
Year Ended December 31,
|
||||||||
(In millions)
|
2018
|
2017
|
2016
|
||||||
Net income (loss)
|
$
|
139
|
|
$
|
(492
|
)
|
$
|
185
|
|
Less: Net income (loss) attributable to noncontrolling interests
|
19
|
|
7
|
|
(69
|
)
|
|||
Net income (loss) attributable to Baker Hughes, a GE company, LLC
|
120
|
|
(499
|
)
|
254
|
|
|||
Other comprehensive income (loss):
|
|
|
|
||||||
Investment securities
|
(3
|
)
|
4
|
|
—
|
|
|||
Foreign currency translation adjustments
|
(502
|
)
|
(14
|
)
|
(416
|
)
|
|||
Cash flow hedges
|
(4
|
)
|
12
|
|
(8
|
)
|
|||
Benefit plans
|
(64
|
)
|
55
|
|
54
|
|
|||
Other comprehensive income (loss)
|
(573
|
)
|
57
|
|
(370
|
)
|
|||
Less: Other comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
3
|
|
(14
|
)
|
|||
Other comprehensive income (loss) attributable Baker Hughes, a GE company, LLC
|
(573
|
)
|
54
|
|
(356
|
)
|
|||
Comprehensive loss
|
(434
|
)
|
(435
|
)
|
(185
|
)
|
|||
Less: Comprehensive income (loss) attributable to noncontrolling interests
|
19
|
|
10
|
|
(83
|
)
|
|||
Comprehensive loss attributable to Baker Hughes, a GE company, LLC
|
$
|
(453
|
)
|
$
|
(445
|
)
|
$
|
(102
|
)
|
|
||||||
|
December 31,
|
|||||
(In millions)
|
2018
|
2017
|
||||
ASSETS
|
||||||
Current Assets:
|
|
|
||||
Cash, cash equivalents and restricted cash
(1)
|
$
|
3,677
|
|
$
|
7,026
|
|
Current receivables, net
|
6,062
|
|
6,129
|
|
||
Inventories, net
|
4,620
|
|
4,507
|
|
||
All other current assets
|
639
|
|
872
|
|
||
Total current assets
|
14,998
|
|
18,534
|
|
||
Property, plant and equipment, less accumulated depreciation
|
6,228
|
|
6,959
|
|
||
Goodwill
|
20,423
|
|
19,654
|
|
||
Other intangible assets, net
|
5,719
|
|
6,358
|
|
||
Contract and other deferred assets
|
1,894
|
|
2,044
|
|
||
All other assets
|
1,900
|
|
2,072
|
|
||
Deferred income taxes
|
1,072
|
|
715
|
|
||
Total assets
(1)
|
$
|
52,234
|
|
$
|
56,336
|
|
LIABILITIES AND EQUITY
|
||||||
Current Liabilities:
|
|
|
||||
Accounts payable
|
$
|
4,018
|
|
$
|
3,376
|
|
Short-term debt and current portion of long-term debt
(1)
|
942
|
|
2,037
|
|
||
Progress collections and deferred income
|
1,765
|
|
1,775
|
|
||
All other current liabilities
|
2,276
|
|
2,047
|
|
||
Total current liabilities
|
9,001
|
|
9,235
|
|
||
Long-term debt
|
6,285
|
|
6,312
|
|
||
Deferred income taxes
|
94
|
|
332
|
|
||
Liabilities for pensions and other employee benefits
|
1,018
|
|
1,172
|
|
||
All other liabilities
|
960
|
|
889
|
|
||
Members' equity:
|
|
|
||||
Members' capital (common units 1,035 & 1,129, issued and outstanding as of December 31, 2018 and 2017, respectively)
|
37,582
|
|
40,678
|
|
||
Retained loss
|
(354
|
)
|
(541
|
)
|
||
Accumulated other comprehensive loss
|
(2,462
|
)
|
(1,881
|
)
|
||
Baker Hughes, a GE company, LLC members' equity
|
34,766
|
|
38,256
|
|
||
Noncontrolling interests
|
110
|
|
140
|
|
||
Total equity
|
34,876
|
|
38,396
|
|
||
Total liabilities and equity
|
$
|
52,234
|
|
$
|
56,336
|
|
(1)
|
Total assets include
$896 million
and
$1,124 million
of assets held on behalf of GE, of which
$747 million
and
$997 million
is cash and cash equivalents and
$149 million
and
$127 million
is investment securities at
December 31, 2018
and
December 31, 2017
, respectively, and a corresponding amount of liability is reported in short-term borrowings. See "Note 16. Related Party Transactions" for further details.
|
(In millions, except per unit amounts)
|
Common Unitholders
|
Parent's Net Investment
|
Retained Loss
|
Accumulated Other Comprehensive Loss
|
Non-controlling Interests
|
Total
|
||||||||||||
Balance at December 31, 2015
|
$
|
—
|
|
$
|
15,920
|
|
$
|
—
|
|
$
|
(1,532
|
)
|
$
|
157
|
|
$
|
14,545
|
|
Effect of adoption of ASU 2014-09
|
|
(432
|
)
|
|
|
|
(432
|
)
|
||||||||||
Comprehensive income:
|
|
|
|
|
|
|
—
|
|
||||||||||
Net income (loss)
|
|
254
|
|
|
|
|
|
(69
|
)
|
185
|
|
|||||||
Other comprehensive loss
|
|
|
|
|
(356
|
)
|
(14
|
)
|
(370
|
)
|
||||||||
Changes in Parent's net investment
|
|
259
|
|
|
|
|
|
259
|
|
|||||||||
Net activity related to noncontrolling interests
|
|
|
|
|
|
|
|
|
93
|
|
93
|
|
||||||
Balance at December 31, 2016
|
—
|
|
16,001
|
|
—
|
|
(1,888
|
)
|
167
|
|
14,280
|
|
||||||
Comprehensive income:
|
|
|
|
|
|
|
||||||||||||
Net income
|
|
|
42
|
|
|
|
4
|
|
46
|
|
||||||||
Other comprehensive income (loss)
|
|
|
|
|
(69
|
)
|
3
|
|
(66
|
)
|
||||||||
Changes in Parent's net investment
|
|
|
862
|
|
|
(13
|
)
|
|
849
|
|
||||||||
Net activity related to noncontrolling interests
|
|
|
|
|
|
4
|
|
4
|
|
|||||||||
Cash contribution received from GE
|
|
|
7,400
|
|
|
|
|
7,400
|
|
|||||||||
Issuance of common units to GE on business combination
|
24,305
|
|
(24,305
|
)
|
|
|
|
—
|
|
|||||||||
Issuance of common units to BHGE on business combination
|
24,798
|
|
|
|
|
76
|
|
24,874
|
|
|||||||||
Distribution to BHGE
|
(7,498
|
)
|
|
|
|
|
(7,498
|
)
|
||||||||||
Activity after business combination of July 3, 2017:
|
|
|
|
|
|
|
||||||||||||
Net income (loss)
|
|
|
|
(541
|
)
|
|
3
|
|
(538
|
)
|
||||||||
Other comprehensive income
|
|
|
|
|
123
|
|
—
|
|
123
|
|
||||||||
Regular cash distribution to members ($0.35 per unit)
|
(406
|
)
|
|
|
|
|
(406
|
)
|
||||||||||
Net activity related to noncontrolling interests
|
(56
|
)
|
|
|
(32
|
)
|
(117
|
)
|
(205
|
)
|
||||||||
Repurchase of common units
|
(501
|
)
|
|
|
|
|
(501
|
)
|
||||||||||
BHGE Stock-based compensation cost
|
37
|
|
|
|
|
|
37
|
|
||||||||||
Other
|
(1
|
)
|
|
|
(2
|
)
|
|
(3
|
)
|
|||||||||
Balance at December 31, 2017
|
40,678
|
|
—
|
|
(541
|
)
|
(1,881
|
)
|
140
|
|
38,396
|
|
||||||
Effect of adoption of ASU 2016-16 on taxes
|
|
|
|
67
|
|
|
|
67
|
|
|||||||||
Comprehensive income (loss):
|
|
|
|
|
|
|
||||||||||||
Net income
|
|
|
|
120
|
|
|
19
|
|
139
|
|
||||||||
Other comprehensive loss
|
|
|
|
|
(573
|
)
|
|
(573
|
)
|
|||||||||
Regular cash distribution to members ($0.72 per unit)
|
(787
|
)
|
|
|
|
|
(787
|
)
|
||||||||||
Other cash distribution to members
|
(37
|
)
|
|
|
|
|
(37
|
)
|
||||||||||
Repurchase of common units
|
(2,461
|
)
|
|
|
|
|
(2,461
|
)
|
||||||||||
BHGE Stock-based compensation cost
|
121
|
|
|
|
|
|
121
|
|
||||||||||
Other
|
68
|
|
|
|
(8
|
)
|
(49
|
)
|
11
|
|
||||||||
Balance at December 31, 2018
|
$
|
37,582
|
|
$
|
—
|
|
$
|
(354
|
)
|
$
|
(2,462
|
)
|
$
|
110
|
|
$
|
34,876
|
|
|
Year Ended December 31,
|
||||||||
(In millions)
|
2018
|
2017
|
2016
|
||||||
Cash flows from operating activities:
|
|
|
|
||||||
Net income (loss)
|
$
|
139
|
|
$
|
(492
|
)
|
$
|
185
|
|
Adjustments to reconcile net income (loss) to net cash flows from (used in) operating activities:
|
|
|
|
||||||
Depreciation and amortization
|
1,486
|
|
1,103
|
|
550
|
|
|||
Provision for deferred income taxes
|
(98
|
)
|
(232
|
)
|
(38
|
)
|
|||
Gain on sale of Natural Gas Solution business
|
(171
|
)
|
—
|
|
—
|
|
|||
Equity in loss of affiliate
|
139
|
|
11
|
|
—
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
||||||
Current receivables
|
(160
|
)
|
(1,304
|
)
|
278
|
|
|||
Inventories
|
(339
|
)
|
418
|
|
367
|
|
|||
Accounts payable
|
738
|
|
290
|
|
(256
|
)
|
|||
Progress collections and deferred income
|
(27
|
)
|
(293
|
)
|
(719
|
)
|
|||
Contract and other deferred assets
|
129
|
|
(439
|
)
|
(88
|
)
|
|||
Other operating items, net
|
(98
|
)
|
140
|
|
(17
|
)
|
|||
Net cash flows from (used in) operating activities
|
1,738
|
|
(798
|
)
|
262
|
|
|||
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
||||||
Expenditures for capital assets
|
(995
|
)
|
(665
|
)
|
(424
|
)
|
|||
Proceeds from disposal of assets
|
458
|
|
172
|
|
20
|
|
|||
Proceeds from business dispositions
|
453
|
|
20
|
|
—
|
|
|||
Net cash paid for acquisitions
|
(89
|
)
|
(3,365
|
)
|
(1
|
)
|
|||
Net cash paid for business interests
|
(505
|
)
|
(10
|
)
|
(15
|
)
|
|||
Other investing items, net
|
100
|
|
(275
|
)
|
(52
|
)
|
|||
Net cash flows used in investing activities
|
(578
|
)
|
(4,123
|
)
|
(472
|
)
|
|||
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
||||||
Net repayments of short-term borrowings
|
(376
|
)
|
(663
|
)
|
(156
|
)
|
|||
Proceeds from the issuance of long-term debt
|
—
|
|
3,928
|
|
—
|
|
|||
Repayments of long-term debt
|
(684
|
)
|
(177
|
)
|
—
|
|
|||
Distributions to members
|
(824
|
)
|
(406
|
)
|
—
|
|
|||
Repurchase of common units
|
(2,486
|
)
|
(477
|
)
|
—
|
|
|||
Net transfer from Parent
|
—
|
|
1,498
|
|
191
|
|
|||
Contribution received from GE
|
—
|
|
7,400
|
|
—
|
|
|||
Other financing items, net
|
(11
|
)
|
(189
|
)
|
(137
|
)
|
|||
Net cash flows from (used in) financing activities
|
(4,381
|
)
|
10,914
|
|
(102
|
)
|
|||
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash
|
(128
|
)
|
52
|
|
(139
|
)
|
|||
Increase (decrease) in cash, cash equivalents and restricted cash
|
(3,349
|
)
|
6,045
|
|
(451
|
)
|
|||
Cash, cash equivalents and restricted cash, beginning of period
|
7,026
|
|
981
|
|
1,432
|
|
|||
Cash, cash equivalents and restricted cash, end of period
|
$
|
3,677
|
|
$
|
7,026
|
|
$
|
981
|
|
|
|
|
|
||||||
Supplemental cash flows disclosures:
|
|
|
|
||||||
Income taxes paid, net of refunds
|
$
|
424
|
|
$
|
230
|
|
$
|
317
|
|
Interest paid
|
$
|
301
|
|
$
|
109
|
|
$
|
55
|
|
•
|
Level 1 - Quoted prices for identical instruments in active markets.
|
•
|
Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
|
•
|
Level 3 - Significant inputs to the valuation model are unobservable.
|
|
|
Year Ended
|
|||||
|
|
December 31, 2017
|
December 31, 2016
|
||||
Revenue:
|
|
|
|
||||
Sales of goods
|
|
$
|
163
|
|
$
|
(26
|
)
|
Sales of services
|
|
(243
|
)
|
(161
|
)
|
||
Total revenue
|
|
(80
|
)
|
(187
|
)
|
||
|
|
|
|
||||
Operating loss
|
|
(175
|
)
|
(226
|
)
|
||
Net loss and net loss attributable to BHGE LLC
|
|
(150
|
)
|
(149
|
)
|
|
Year Ended
|
|||||
|
December 31, 2017
|
December 31, 2016
|
||||
Operating income (loss)
|
$
|
(1
|
)
|
$
|
24
|
|
Non operating income (loss)
|
1
|
|
(24
|
)
|
Total Revenue
|
2018
|
2017
|
2016
|
||||||
U.S.
|
$
|
6,576
|
|
$
|
4,409
|
|
$
|
3,156
|
|
Non-U.S.
|
16,301
|
|
12,770
|
|
9,926
|
|
|||
Total
|
$
|
22,877
|
|
$
|
17,179
|
|
$
|
13,082
|
|
Preliminary identifiable assets acquired and liabilities assumed
|
Estimated fair value at July 3, 2017
|
||
Assets
|
|
||
Cash and equivalents
|
$
|
4,133
|
|
Current receivables
|
2,342
|
|
|
Inventories
|
1,712
|
|
|
Property, plant and equipment
|
4,514
|
|
|
Intangible assets
(1)
|
4,005
|
|
|
Deferred income taxes
(2)
|
30
|
|
|
All other assets
|
1,335
|
|
|
Liabilities
|
|
||
Accounts payable
|
$
|
(1,213
|
)
|
Borrowings
|
(3,370
|
)
|
|
Liabilities for pension and other postretirement benefits
|
(654
|
)
|
|
All other liabilities
|
(1,670
|
)
|
|
Total identifiable net assets
|
$
|
11,164
|
|
Noncontrolling interest associated with net assets acquired
|
(35
|
)
|
|
Goodwill
(3)
|
13,669
|
|
|
Total purchase consideration
|
$
|
24,798
|
|
(1)
|
Intangible assets, as provided in the table below, are recorded at fair value, as determined by management based on available information. The estimated useful lives for intangible assets were determined based upon the remaining
|
|
Estimated Fair Value
|
Estimated Weighted
Average Life (Years) |
||
Trademarks - Baker Hughes
|
$
|
2,100
|
|
Indefinite life
|
Customer relationships
|
1,240
|
|
15
|
|
Patents and technology
|
465
|
|
10
|
|
In-process research and development
|
70
|
|
Indefinite life
|
|
Capitalized software
|
64
|
|
2
|
|
Trade names - other
|
45
|
|
10
|
|
Favorable lease contracts & others
|
21
|
|
10
|
|
Total
|
$
|
4,005
|
|
|
(2)
|
Includes approximately
$83 million
of net deferred tax liabilities related to the fair value of intangible assets included in the purchase consideration and approximately
$113 million
of other net deferred tax assets, including non-U.S. loss carryforwards net of valuation allowances partially offset by liabilities for unrecognized benefits.
|
(3)
|
Goodwill represents the excess of the total purchase consideration over fair value of the net assets recognized and represents the future economic benefits that we believe will result from combining the operations of GE O&G and Baker Hughes, including expected future synergies and operating efficiencies. Goodwill resulting from the Transactions has been primarily allocated to the Oilfield Services segment, of which
$67 million
i
s deductible for tax purposes. See "Note 7. Goodwill and Other Intangible Assets" for allocation of goodwill to all the segments.
|
|
2017
|
2016
|
||||
Revenue
|
$
|
21,841
|
|
$
|
22,915
|
|
Net loss
|
(586
|
)
|
(2,883
|
)
|
||
Net loss attributable to the Company
|
(592
|
)
|
(2,816
|
)
|
|
2018
|
2017
|
||||
Customer receivables
|
$
|
4,974
|
|
$
|
4,700
|
|
Related parties
|
746
|
|
915
|
|
||
Other
|
669
|
|
844
|
|
||
Total current receivables
|
6,389
|
|
6,459
|
|
||
Less: Allowance for doubtful accounts
|
(327
|
)
|
(330
|
)
|
||
Total current receivables, net
|
$
|
6,062
|
|
$
|
6,129
|
|
|
2018
|
2017
|
||||
Finished goods
|
$
|
2,575
|
|
$
|
2,577
|
|
Work in process and raw materials
|
2,045
|
|
1,930
|
|
||
Total inventories, net
|
$
|
4,620
|
|
$
|
4,507
|
|
|
Useful Life
|
2018
|
2017
|
||||
Land and improvements
(1)
|
8 - 20 years
(1)
|
$
|
432
|
|
$
|
413
|
|
Buildings, structures and related equipment
|
5 - 40 years
|
2,854
|
|
3,168
|
|
||
Machinery, equipment and other
|
2 - 20 years
|
6,567
|
|
6,195
|
|
||
Total cost
|
|
9,853
|
|
9,776
|
|
||
Less: Accumulated depreciation
|
|
3,625
|
|
2,817
|
|
||
Property, plant and equipment, less accumulated depreciation
|
|
$
|
6,228
|
|
$
|
6,959
|
|
(1)
|
Useful life excludes land.
|
|
Oilfield Services
|
Oilfield Equipment
|
Turbo-machinery & Process Solutions
|
Digital Solutions
|
Total
|
||||||||||
Balance at December 31, 2016, gross
|
$
|
2,779
|
|
$
|
3,852
|
|
$
|
1,814
|
|
$
|
1,989
|
|
$
|
10,434
|
|
Accumulated impairment at December 31, 2016
|
(2,633
|
)
|
(867
|
)
|
—
|
|
(254
|
)
|
(3,754
|
)
|
|||||
Balance at December 31, 2016
|
146
|
|
2,985
|
|
1,814
|
|
1,735
|
|
6,680
|
|
|||||
Acquisitions and purchase accounting adjustments
(1)
|
12,778
|
|
—
|
|
—
|
|
—
|
|
12,778
|
|
|||||
Currency exchange and others
|
8
|
|
49
|
|
92
|
|
47
|
|
196
|
|
|||||
Balance at December 31, 2017
|
12,932
|
|
3,034
|
|
1,906
|
|
1,782
|
|
19,654
|
|
|||||
Acquisitions and purchase accounting adjustments
(1)
|
(157
|
)
|
293
|
|
394
|
|
429
|
|
959
|
|
|||||
Currency exchange and others
|
(26
|
)
|
(17
|
)
|
(114
|
)
|
(33
|
)
|
(190
|
)
|
|||||
Balance at December 31, 2018
|
$
|
12,749
|
|
$
|
3,310
|
|
$
|
2,186
|
|
$
|
2,178
|
|
$
|
20,423
|
|
(1)
|
Includes goodwill associated with the acquisition of Baker Hughes. The final determination of fair value of the assets and liabilities and the related goodwill associated with the acquisition of Baker Hughes was concluded in the second quarter of 2018. Of the total goodwill of
$13,669 million
resulting from the acquisition of Baker Hughes,
$12,604 million
is allocated to our Oilfield Services segment and the remainder to our other segments based on the expected benefit from the synergies of the acquisition.
|
|
2018
|
2017
|
||||||||||||||||
|
Gross
Carrying Amount |
Accumulated
Amortization |
Net
|
Gross
Carrying Amount |
Accumulated
Amortization |
Net
|
||||||||||||
Technology
|
$
|
1,107
|
|
$
|
(526
|
)
|
$
|
581
|
|
$
|
1,177
|
|
$
|
(440
|
)
|
$
|
737
|
|
Customer relationships
|
3,085
|
|
(944
|
)
|
2,141
|
|
3,202
|
|
(819
|
)
|
2,383
|
|
||||||
Capitalized software
|
1,118
|
|
(824
|
)
|
294
|
|
1,130
|
|
(697
|
)
|
433
|
|
||||||
Trade names and trademarks
|
698
|
|
(229
|
)
|
469
|
|
757
|
|
(159
|
)
|
598
|
|
||||||
Other
|
14
|
|
(2
|
)
|
12
|
|
10
|
|
—
|
|
10
|
|
||||||
Finite-lived intangible assets
|
6,022
|
|
(2,525
|
)
|
3,497
|
|
6,276
|
|
(2,115
|
)
|
4,161
|
|
||||||
Indefinite-lived intangible assets
(1)
|
2,222
|
|
—
|
|
2,222
|
|
2,197
|
|
—
|
|
2,197
|
|
||||||
Total intangible assets
|
$
|
8,244
|
|
$
|
(2,525
|
)
|
$
|
5,719
|
|
$
|
8,473
|
|
$
|
(2,115
|
)
|
$
|
6,358
|
|
(1)
|
Indefinite-lived intangible assets principally comprise trade names and trademarks acquired in business combinations.
|
Year
|
Estimated Amortization Expense
|
||
2019
|
$
|
348
|
|
2020
|
316
|
|
|
2021
|
267
|
|
|
2022
|
225
|
|
|
2023
|
213
|
|
|
2018
|
2017
|
||||
Long-term product service agreements
|
$
|
609
|
|
$
|
589
|
|
Long-term equipment contracts
(1)
|
1,085
|
|
1,095
|
|
||
Contract assets (total revenue in excess of billings)
(2)
|
1,694
|
|
1,684
|
|
||
Deferred inventory costs
(3)
|
179
|
|
360
|
|
||
Non-recurring engineering costs
|
21
|
|
—
|
|
||
Contract and other deferred assets
|
$
|
1,894
|
|
$
|
2,044
|
|
(1)
|
Reflects revenue earned in excess of billings on our long-term contracts to construct technically complex equipment and certain other service agreements.
|
(2)
|
Contract assets (total revenue in excess of billings) were
$1,233 million
as of January 1, 2017.
|
(3)
|
Deferred inventory costs were
$276 million
as of January 1, 2017, which represents cost deferral for shipped goods and other costs for which the criteria for revenue recognition has not yet been met.
|
|
2018
|
2017
|
||||
Progress collections
|
$
|
1,600
|
|
$
|
1,456
|
|
Deferred income
|
165
|
|
319
|
|
||
Progress collections and deferred income (contract liabilities)
(1)
|
$
|
1,765
|
|
$
|
1,775
|
|
(1)
|
Progress collections and deferred income (contract liabilities) were $
2,038 million
at January 1, 2017.
|
|
2018
|
2017
|
||||||||
|
Amount
|
Weighted Average Rate
(1)
|
Amount
|
Weighted Average Rate
(1)
|
||||||
Short-term borrowings
|
|
|
|
|
||||||
Short-term bank borrowings
|
$
|
—
|
|
n/a
|
|
$
|
171
|
|
12.6
|
%
|
Current portion of long-term borrowings
|
—
|
|
n/a
|
|
639
|
|
2.1
|
%
|
||
Short-term borrowings from GE
|
896
|
|
n/a
|
|
1,124
|
|
n/a
|
|
||
Other short-term borrowings
|
46
|
|
9.9
|
%
|
103
|
|
7.6
|
%
|
||
Total short-term borrowings
|
942
|
|
|
|
2,037
|
|
|
|||
|
|
|
|
|
||||||
Long-term borrowings
|
|
|
|
|
||||||
3.2% Senior Notes due August 2021
(2)
|
523
|
|
2.5
|
%
|
526
|
|
2.5
|
%
|
||
2.773% Senior Notes due December 2022
|
1,245
|
|
2.9
|
%
|
1,244
|
|
2.9
|
%
|
||
8.55% Debentures due June 2024
(2)
|
131
|
|
4.1
|
%
|
135
|
|
3.9
|
%
|
||
3.337% Senior Notes due December 2027
|
1,343
|
|
3.4
|
%
|
1,342
|
|
3.4
|
%
|
||
6.875% Notes due January 2029
(2)
|
294
|
|
3.9
|
%
|
308
|
|
3.9
|
%
|
||
5.125% Notes due September 2040
(2)
|
1,306
|
|
4.2
|
%
|
1,311
|
|
4.1
|
%
|
||
4.080% Senior Notes due December 2047
|
1,336
|
|
4.1
|
%
|
1,337
|
|
4.1
|
%
|
||
Capital leases
|
103
|
|
5.4
|
%
|
87
|
|
7.0
|
%
|
||
Other long-term borrowings
|
4
|
|
3.8
|
%
|
22
|
|
1.9
|
%
|
||
Total long-term borrowings
|
6,285
|
|
|
6,312
|
|
|
||||
Total borrowings
|
$
|
7,227
|
|
|
|
$
|
8,349
|
|
|
|
(1)
|
Weighted average effective interest rate is based on the carrying value including step-up adjustments, as applicable, recorded upon the acquisition of Baker Hughes as of December 31, 2018 and 2017.
|
(2)
|
Represents long-term fixed rate debt obligations assumed in connection with the acquisition of Baker Hughes, net of amounts repurchased subsequent to the closing of the Transactions.
|
|
2019
|
2020
|
2021
|
2022
|
2023
|
Thereafter
|
||||||||||||
Total debt
|
$
|
942
|
|
$
|
34
|
|
$
|
549
|
|
$
|
1,256
|
|
$
|
11
|
|
$
|
4,435
|
|
|
Pension Benefits
|
Other Postretirement
Benefits
|
||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||
Change in benefit obligation:
|
|
|
|
|
||||||||
Benefit obligation at beginning of year
|
$
|
2,418
|
|
$
|
820
|
|
$
|
187
|
|
$
|
117
|
|
Service cost
|
21
|
|
37
|
|
2
|
|
2
|
|
||||
Interest cost
|
71
|
|
51
|
|
5
|
|
6
|
|
||||
Plan amendment
|
20
|
|
—
|
|
1
|
|
(23
|
)
|
||||
Actuarial loss (gain)
|
(93
|
)
|
41
|
|
(23
|
)
|
—
|
|
||||
Benefits paid
|
(67
|
)
|
(65
|
)
|
(21
|
)
|
(13
|
)
|
||||
Curtailments
|
(7
|
)
|
(45
|
)
|
(5
|
)
|
5
|
|
||||
Settlements
|
(59
|
)
|
(10
|
)
|
—
|
|
—
|
|
||||
Business acquisition
(1)
|
—
|
|
1,546
|
|
—
|
|
93
|
|
||||
Other
|
16
|
|
(2
|
)
|
(39
|
)
|
—
|
|
||||
Foreign currency translation adjustments
|
(59
|
)
|
45
|
|
—
|
|
—
|
|
||||
Benefit obligation at end of year
|
2,261
|
|
2,418
|
|
107
|
|
187
|
|
||||
|
|
|
|
|
||||||||
Change in plan assets:
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of year
|
2,059
|
|
567
|
|
—
|
|
—
|
|
||||
Actual return on plan assets
|
(60
|
)
|
152
|
|
—
|
|
—
|
|
||||
Employer contributions
|
51
|
|
50
|
|
21
|
|
13
|
|
||||
Benefits paid
|
(67
|
)
|
(65
|
)
|
(21
|
)
|
(13
|
)
|
||||
Settlements
|
(59
|
)
|
(10
|
)
|
—
|
|
—
|
|
||||
Business acquisition
(1)
|
—
|
|
1,342
|
|
—
|
|
—
|
|
||||
Other
|
(9
|
)
|
(2
|
)
|
—
|
|
—
|
|
||||
Foreign currency translation adjustments
|
(49
|
)
|
25
|
|
—
|
|
—
|
|
||||
Fair value of plan assets at end of year
|
1,866
|
|
2,059
|
|
—
|
|
—
|
|
||||
|
|
|
|
|
||||||||
Funded status - underfunded at end of year
|
$
|
(395
|
)
|
$
|
(359
|
)
|
$
|
(107
|
)
|
$
|
(187
|
)
|
|
|
|
|
|
||||||||
Accumulated benefit obligation
|
$
|
2,225
|
|
$
|
2,373
|
|
$
|
107
|
|
$
|
187
|
|
(1)
|
Relates to the acquisition of Baker Hughes on July 3, 2017.
|
|
Pension Benefits
|
Other Postretirement
Benefits
|
||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||
Noncurrent assets
|
$
|
47
|
|
$
|
46
|
|
$
|
—
|
|
$
|
—
|
|
Current liabilities
|
(13
|
)
|
(10
|
)
|
(19
|
)
|
(24
|
)
|
||||
Noncurrent liabilities
|
(429
|
)
|
(395
|
)
|
(88
|
)
|
(163
|
)
|
||||
Net amount recognized
|
$
|
(395
|
)
|
$
|
(359
|
)
|
$
|
(107
|
)
|
$
|
(187
|
)
|
|
Pension Benefits
|
Other Postretirement
Benefits
|
||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||
Projected benefit obligation
|
$
|
1,621
|
|
$
|
1,692
|
|
n/a
|
|
n/a
|
|
||
Accumulated benefit obligation
|
$
|
1,585
|
|
$
|
1,647
|
|
$
|
107
|
|
$
|
187
|
|
Fair value of plan assets
|
$
|
1,179
|
|
$
|
1,286
|
|
n/a
|
|
n/a
|
|
|
Pension Benefits
|
Other Postretirement
Benefits
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018
|
2017
|
2016
|
||||||||||||
Service cost
|
$
|
21
|
|
|
$
|
37
|
|
|
$
|
18
|
|
|
$
|
2
|
|
$
|
2
|
|
$
|
2
|
|
Interest cost
|
71
|
|
|
51
|
|
|
34
|
|
|
5
|
|
6
|
|
5
|
|
||||||
Expected return on plan assets
|
(121
|
)
|
|
(81
|
)
|
|
(46
|
)
|
|
—
|
|
—
|
|
—
|
|
||||||
Amortization of prior service credit
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
(3
|
)
|
(2
|
)
|
||||||
Amortization of net actuarial loss (gain)
|
10
|
|
|
12
|
|
|
14
|
|
|
(2
|
)
|
(2
|
)
|
—
|
|
||||||
Curtailment / settlement loss (gain)
|
2
|
|
|
(45
|
)
|
(2)
|
(26
|
)
|
(1)
|
(5
|
)
|
2
|
|
(2
|
)
|
||||||
Net periodic cost (income)
|
$
|
(17
|
)
|
|
$
|
(26
|
)
|
|
$
|
(6
|
)
|
|
$
|
(5
|
)
|
$
|
5
|
|
$
|
3
|
|
(1)
|
Primarily associated with
two
UK plans merging into the GE UK Pension Plan.
|
(2)
|
As a result of the acquisition of Baker Hughes, we obtained a non-contributory pension plan (the Baker Hughes Incorporated Pension Plan or BHIPP). In 2017, the Compensation Committee of the Board of Directors approved amendments to the BHIPP to close the plan to new participants and freeze accruals of future service-related benefits effective as of December 31, 2017. As a result of these actions, the Company recorded a curtailment gain of
$45 million
. The curtailment was recorded by the Company during the fourth quarter of 2017 and included in the “Other non-operating income (loss), net” caption of the consolidated and combined statements of income (loss).
|
|
Pension Benefits
|
Other Postretirement
Benefits
|
||||||
|
2018
|
2017
|
2018
|
2017
|
||||
Discount rate
|
3.43
|
%
|
2.99
|
%
|
3.92
|
%
|
3.32
|
%
|
Rate of compensation increase
|
3.78
|
%
|
3.82
|
%
|
n/a
|
|
n/a
|
|
|
Pension Benefits
|
Other Postretirement
Benefits
|
||||||||||
|
2018
|
2017
|
2016
|
2018
|
2017
|
2016
|
||||||
Discount rate
|
2.99
|
%
|
3.24
|
%
|
3.83
|
%
|
3.32
|
%
|
3.72
|
%
|
4.25
|
%
|
Expected long-term return on plan assets
|
5.94
|
%
|
6.26
|
%
|
6.86
|
%
|
n/a
|
|
n/a
|
|
n/a
|
|
|
Pension Benefits
|
Other Postretirement
Benefits
|
||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||
Net actuarial loss (gain)
|
$
|
177
|
|
$
|
117
|
|
$
|
(29
|
)
|
$
|
(16
|
)
|
Net prior service cost (credit)
|
20
|
|
—
|
|
(18
|
)
|
(25
|
)
|
||||
Total
|
$
|
197
|
|
$
|
117
|
|
$
|
(47
|
)
|
$
|
(41
|
)
|
|
2018
|
2017
|
||||
Equity securities
|
|
|
||||
U.S. equity securities
(1)
|
$
|
215
|
|
$
|
207
|
|
Global equity securities
(1)
|
338
|
|
551
|
|
||
Debt securities
|
|
|
||||
Fixed income and cash investment funds
|
937
|
|
658
|
|
||
U.S. corporate
|
—
|
|
70
|
|
||
Other debt securities
|
4
|
|
55
|
|
||
Private equities
|
60
|
|
107
|
|
||
Real estate
|
35
|
|
44
|
|
||
Other investments
(2)
|
277
|
|
367
|
|
||
Total plan assets
|
$
|
1,866
|
|
$
|
2,059
|
|
(1)
|
Include direct investments and investment funds.
|
(2)
|
Substantially all represented hedge fund and asset allocation fund investments.
|
Year
|
Pension
Benefits
|
Other Postretirement
Benefits
|
||||||||
2019
|
|
$
|
113
|
|
|
|
$
|
19
|
|
|
2020
|
|
109
|
|
|
|
17
|
|
|
||
2021
|
|
112
|
|
|
|
12
|
|
|
||
2022
|
|
113
|
|
|
|
9
|
|
|
||
2023
|
|
113
|
|
|
|
8
|
|
|
||
2024-2028
|
|
594
|
|
|
|
31
|
|
|
|
2018
|
2017
|
2016
|
||||||
Current:
|
|
|
|
||||||
U.S.
|
$
|
27
|
|
$
|
(33
|
)
|
$
|
(114
|
)
|
Foreign
|
473
|
|
411
|
|
325
|
|
|||
Total current
|
500
|
|
378
|
|
211
|
|
|||
Deferred:
|
|
|
|
||||||
U.S.
|
127
|
|
(165
|
)
|
(5
|
)
|
|||
Foreign
|
(225
|
)
|
(67
|
)
|
(33
|
)
|
|||
Total deferred
|
(98
|
)
|
(232
|
)
|
(38
|
)
|
|||
Provision for income taxes
|
$
|
402
|
|
$
|
146
|
|
$
|
173
|
|
|
2018
|
2017
|
2016
|
||||||
U.S.
|
$
|
(672
|
)
|
$
|
(1,189
|
)
|
$
|
(487
|
)
|
Foreign
|
1,213
|
|
843
|
|
845
|
|
|||
Income (loss) before income taxes, inclusive of equity in loss of affiliate
|
$
|
541
|
|
$
|
(346
|
)
|
$
|
358
|
|
|
2018
|
2017
|
2016
|
||||||
Income (loss) before income taxes, inclusive of equity in loss of affiliate
|
$
|
541
|
|
$
|
(346
|
)
|
$
|
358
|
|
Taxes at the U.S. federal statutory income tax rate
|
114
|
|
(121
|
)
|
125
|
|
|||
Effect of foreign operations
|
103
|
|
(23
|
)
|
(2
|
)
|
|||
Tax impact of partnership structure
|
109
|
|
275
|
|
—
|
|
|||
Change in valuation allowances
|
59
|
|
69
|
|
28
|
|
|||
Tax Cuts and Jobs Act enactment
|
25
|
|
(32
|
)
|
—
|
|
|||
Other - net
|
(8
|
)
|
(22
|
)
|
22
|
|
|||
Provision for income taxes
|
$
|
402
|
|
$
|
146
|
|
$
|
173
|
|
Actual income tax rate
|
74.3
|
%
|
(42.2
|
)%
|
48.3
|
%
|
|
2018
|
2017
|
||||
Deferred tax assets:
|
|
|
||||
Receivables
|
$
|
117
|
|
$
|
98
|
|
Inventory
|
79
|
|
63
|
|
||
Property
|
191
|
|
144
|
|
||
Goodwill and other intangibles
|
132
|
|
—
|
|
||
Employee benefits
|
97
|
|
64
|
|
||
Other accrued expenses
|
74
|
|
91
|
|
||
Operating loss carryforwards
|
1,500
|
|
1,376
|
|
||
Tax credit carryforwards
|
173
|
|
147
|
|
||
Other
|
233
|
|
498
|
|
||
Total deferred income tax asset
|
2,596
|
|
2,481
|
|
||
Valuation allowances
|
(1,591
|
)
|
(1,845
|
)
|
||
Total deferred income tax asset after valuation allowance
|
1,005
|
|
636
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||
Goodwill and other intangibles
|
—
|
|
(202
|
)
|
||
Undistributed earnings of foreign subsidiaries
|
(9
|
)
|
—
|
|
||
Other
|
(18
|
)
|
(51
|
)
|
||
Total deferred income tax liability
|
(27
|
)
|
(253
|
)
|
||
Net deferred tax asset
|
$
|
978
|
|
$
|
383
|
|
Asset / (Liability)
|
2018
|
2017
|
||||
Balance at beginning of year
|
$
|
(395
|
)
|
$
|
(94
|
)
|
Balance acquired from Baker Hughes
|
(142
|
)
|
(326
|
)
|
||
Additions for tax positions of the current year
|
(21
|
)
|
(13
|
)
|
||
Additions for tax positions of prior years
|
(95
|
)
|
(19
|
)
|
||
Reductions for tax positions of prior years
|
101
|
|
32
|
|
||
Settlements with tax authorities
|
35
|
|
14
|
|
||
Lapse of statute of limitations
|
45
|
|
11
|
|
||
Balance at end of year
|
$
|
(472
|
)
|
$
|
(395
|
)
|
|
2018
|
2017
|
||||||
|
Common Units Held by BHGE
|
Common Units Held by GE
|
Common Units Held by BHGE
|
Common Units Held by GE
|
||||
Balance at beginning of year
|
422,208
|
|
706,985
|
|
—
|
|
—
|
|
Issue of units to BHGE on business combination at July 3, 2017
|
—
|
|
—
|
|
427,709
|
|
717,111
|
|
Issue of units to BHGE under equity incentive plan
|
1,492
|
|
—
|
|
546
|
|
—
|
|
Exchange of common units
(1)
|
101,200
|
|
(101,200
|
)
|
—
|
|
—
|
|
Repurchase program
(2) (3)
|
(11,501
|
)
|
(84,241
|
)
|
(6,047
|
)
|
(10,126
|
)
|
Balance at end of year
|
513,399
|
|
521,543
|
|
422,208
|
|
706,985
|
|
(1)
|
In November 2018, BHGE completed an underwritten secondary public offering in which GE and its affiliates sold
101.2 million
of its shares of Class A common stock. BHGE did not receive any proceeds from the shares sold by GE and its affiliates in this offering. The offering included the exchange of our common units (together with the corresponding shares of Class B common stock of BHGE) for Class A common stock of BHGE by GE and its affiliates per the Exchange Agreement.
|
(2)
|
In November 2017, BHGE's board of directors authorized us to repurchase up to
$3 billion
of our common units from BHGE and GE. The
$3 billion
repurchase authorization is the aggregate authorization for repurchases of BHGE's Class A common stock and Class B common stock together with its paired common unit. As of
December 31, 2018
, the stock repurchase program has been substantially completed.
|
(3)
|
During
2018
, we repurchased and canceled
30,742,152
units for a total consideration of
$1 billion
. Additionally, in November 2018, we also repurchased
65 million
of our common units from GE and its affiliates for an aggregate of
$1,461 million
, or
$22.48
per unit, which is the same per unit price, net of discounts and commissions paid by the underwriters to GE and its affiliates in the underwritten public offering. In connection with this repurchase, the corresponding shares of Class B common stock of BHGE held by GE and its affiliates were canceled.
|
|
Investment Securities
|
Foreign Currency Translation Adjustments
|
Cash Flow Hedges
|
Benefit Plans
|
Accumulated Other Comprehensive Loss
|
||||||||||
Balance at December 31, 2016
|
$
|
—
|
|
$
|
(1,795
|
)
|
$
|
(10
|
)
|
$
|
(83
|
)
|
$
|
(1,888
|
)
|
Other comprehensive income (loss) before reclassifications
|
41
|
|
(4
|
)
|
8
|
|
45
|
|
90
|
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
(39
|
)
|
—
|
|
7
|
|
1
|
|
(31
|
)
|
|||||
Deferred taxes
|
2
|
|
(10
|
)
|
(3
|
)
|
9
|
|
(2
|
)
|
|||||
Other comprehensive income (loss)
|
4
|
|
(14
|
)
|
12
|
|
55
|
|
57
|
|
|||||
Less: Other comprehensive income attributable to noncontrolling interests
|
1
|
|
1
|
|
—
|
|
1
|
|
3
|
|
|||||
Less: Other adjustments
|
—
|
|
15
|
|
—
|
|
32
|
|
47
|
|
|||||
Balance at December 31, 2017
|
3
|
|
(1,825
|
)
|
2
|
|
(61
|
)
|
(1,881
|
)
|
|||||
Other comprehensive loss before reclassifications
|
(1
|
)
|
(502
|
)
|
(6
|
)
|
(70
|
)
|
(579
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
—
|
|
1
|
|
5
|
|
6
|
|
|||||
Deferred taxes
|
(2
|
)
|
—
|
|
1
|
|
1
|
|
—
|
|
|||||
Other comprehensive loss
|
(3
|
)
|
(502
|
)
|
(4
|
)
|
(64
|
)
|
(573
|
)
|
|||||
Less: Other adjustments
|
—
|
|
—
|
|
—
|
|
8
|
|
8
|
|
|||||
Balance at December 31, 2018
|
$
|
—
|
|
$
|
(2,327
|
)
|
$
|
(2
|
)
|
$
|
(133
|
)
|
$
|
(2,462
|
)
|
|
2018
|
2017
|
||||||||||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Net Balance
|
Level 1
|
Level 2
|
Level 3
|
Net Balance
|
||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Derivatives
|
$
|
—
|
|
$
|
74
|
|
$
|
—
|
|
$
|
74
|
|
$
|
—
|
|
$
|
150
|
|
$
|
—
|
|
$
|
150
|
|
Investment securities
|
39
|
|
—
|
|
288
|
|
327
|
|
81
|
|
8
|
|
304
|
|
393
|
|
||||||||
Total assets
|
39
|
|
74
|
|
288
|
|
401
|
|
81
|
|
158
|
|
304
|
|
543
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Derivatives
|
—
|
|
(82
|
)
|
—
|
|
(82
|
)
|
—
|
|
(95
|
)
|
—
|
|
(95
|
)
|
||||||||
Total liabilities
|
$
|
—
|
|
$
|
(82
|
)
|
$
|
—
|
|
$
|
(82
|
)
|
$
|
—
|
|
$
|
(95
|
)
|
$
|
—
|
|
$
|
(95
|
)
|
|
2018
|
2017
|
||||
Balance at beginning of year
|
$
|
304
|
|
$
|
—
|
|
Additions as a result of business combination
|
—
|
|
179
|
|
||
Purchases
|
75
|
|
186
|
|
||
Proceeds at maturity
|
(90
|
)
|
(62
|
)
|
||
Unrealized gains (losses) recognized in accumulated other comprehensive income (loss)
|
(1
|
)
|
1
|
|
||
Balance at end of year
|
$
|
288
|
|
$
|
304
|
|
|
2018
|
2017
|
||||||||||||||||||||||
|
Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Estimated Fair Value
|
Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Estimated Fair Value
|
||||||||||||||||
Investment securities
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Non-U.S. debt securities
(1)
|
$
|
288
|
|
$
|
—
|
|
$
|
—
|
|
$
|
288
|
|
$
|
310
|
|
$
|
2
|
|
$
|
—
|
|
$
|
312
|
|
Equity securities
(2)
|
39
|
|
—
|
|
—
|
|
39
|
|
81
|
|
—
|
|
—
|
|
81
|
|
||||||||
Total
|
$
|
327
|
|
$
|
—
|
|
$
|
—
|
|
$
|
327
|
|
$
|
391
|
|
$
|
2
|
|
$
|
—
|
|
$
|
393
|
|
(1)
|
All of our investment securities are classified as available for sale instruments. Non-U.S. debt securities mature in
four
years.
|
(2)
|
Net unrealized gains (losses) recorded to earnings related to these securities were
$(25) million
and
$30 million
for the years ended
December 31, 2018
and
2017
, respectively.
|
|
2018
|
2017
|
||||||||||
|
Assets
|
(Liabilities)
|
Assets
|
(Liabilities)
|
||||||||
Derivatives accounted for as hedges
|
|
|
|
|
||||||||
Currency exchange contracts
|
$
|
—
|
|
$
|
(7
|
)
|
$
|
6
|
|
$
|
—
|
|
|
|
|
|
|
||||||||
Derivatives not accounted for as hedges
|
|
|
|
|
||||||||
Currency exchange contracts
|
74
|
|
(75
|
)
|
144
|
|
(95
|
)
|
||||
Total derivatives
|
$
|
74
|
|
$
|
(82
|
)
|
$
|
150
|
|
$
|
(95
|
)
|
Currency forwards/swaps
|
|
U.S. dollar strengthens
|
|
U.S. dollar weakens
|
Pay U.S. dollars/receive foreign currency
|
|
Fair value decreases
|
|
Fair value increases
|
Currency forwards/swaps
|
|
U.S. dollar strengthens
|
|
U.S. dollar weakens
|
Pay U.S. dollars/receive foreign currency
|
|
Fair value decreases
|
|
Fair value increases
|
Receive U.S. dollars/pay foreign currency
|
|
Fair value increases
|
|
Fair value decreases
|
|
|
|
|
|
Commodity derivatives
|
|
Price increases
|
|
Price decreases
|
Receive commodity/ pay fixed price
|
|
Fair value increases
|
|
Fair value decreases
|
|
2018
|
2017
|
2016
|
|||||||||||||||
|
Cash Flow Hedges
|
Economic Hedges
|
Cash Flow Hedges
|
Economic Hedges
|
Cash Flow Hedges
|
Economic Hedges
|
||||||||||||
Effect on hedging instrument
|
$
|
(6
|
)
|
$
|
(4
|
)
|
$
|
8
|
|
$
|
121
|
|
$
|
38
|
|
$
|
(272
|
)
|
Effect on underlying
|
6
|
|
(34
|
)
|
(8
|
)
|
(152
|
)
|
(38
|
)
|
102
|
|
||||||
Effect on earnings
(1)
|
—
|
|
(38
|
)
|
—
|
|
(31
|
)
|
—
|
|
(170
|
)
|
(1)
|
For cash flow hedges, the effect on earnings, if any, is primarily related to ineffectiveness. For economic hedges on forecasted transactions, the effect on earnings is substantially offset by future earnings on economically hedged items.
|
|
Gain (Loss) Recognized in AOCI
|
Gain (Loss) Reclassified from AOCI to Earnings
|
||||||||||||||||
|
2018
|
2017
|
2016
|
2018
|
2017
|
2016
|
||||||||||||
Currency exchange contracts
|
$
|
(6
|
)
|
$
|
8
|
|
$
|
(38
|
)
|
$
|
(1
|
)
|
$
|
(7
|
)
|
$
|
(37
|
)
|
Segment revenue
|
2018
|
2017
|
2016
|
||||||
Oilfield Services
|
$
|
11,617
|
|
$
|
5,881
|
|
$
|
788
|
|
Oilfield Equipment
|
2,641
|
|
2,661
|
|
3,540
|
|
|||
Turbomachinery & Process Solutions
|
6,015
|
|
6,295
|
|
6,668
|
|
|||
Digital Solutions
|
2,604
|
|
2,342
|
|
2,086
|
|
|||
Total
|
$
|
22,877
|
|
$
|
17,179
|
|
$
|
13,082
|
|
Segment income (loss) before income taxes
|
2018
|
2017
|
2016
|
||||||
Oilfield Services
|
$
|
785
|
|
$
|
67
|
|
$
|
(207
|
)
|
Oilfield Equipment
|
—
|
|
26
|
|
305
|
|
|||
Turbomachinery & Process Solutions
|
621
|
|
665
|
|
1,058
|
|
|||
Digital Solutions
|
390
|
|
357
|
|
363
|
|
|||
Total segment
|
1,796
|
|
1,115
|
|
1,519
|
|
|||
Corporate
|
(405
|
)
|
(370
|
)
|
(375
|
)
|
|||
Inventory impairment and related charges
(1)
|
(105
|
)
|
(244
|
)
|
(138
|
)
|
|||
Restructuring, impairment and other
|
(433
|
)
|
(412
|
)
|
(516
|
)
|
|||
Merger and related costs
|
(153
|
)
|
(373
|
)
|
(33
|
)
|
|||
Other non operating income, net
|
202
|
|
80
|
|
3
|
|
|||
Interest expense, net
|
(223
|
)
|
(131
|
)
|
(102
|
)
|
|||
Total
|
$
|
680
|
|
$
|
(335
|
)
|
$
|
358
|
|
(1)
|
Inventory impairments and related charges are reported in the "Cost of goods sold" caption of the consolidated and combined statements of income (loss). 2017 includes
$87 million
of adjustments to write-up the acquired inventory to its estimated fair value on acquisition of Baker Hughes as this inventory was used or sold in the six months ended December 31, 2017.
|
Segment assets
|
2018
|
2017
|
||||
Oilfield Services
|
$
|
30,647
|
|
$
|
32,568
|
|
Oilfield Equipment
|
7,298
|
|
7,613
|
|
||
Turbomachinery & Process Solutions
|
8,529
|
|
9,147
|
|
||
Digital Solutions
|
4,063
|
|
3,830
|
|
||
Total segment
|
50,537
|
|
53,158
|
|
||
Corporate and eliminations
(1)
|
1,697
|
|
3,178
|
|
||
Total
|
$
|
52,234
|
|
$
|
56,336
|
|
(1)
|
Corporate and eliminations in total segment assets includes adjustments of intercompany investments and receivables that are reflected within the total assets of the
four
reportable segments.
|
Segment depreciation and amortization
|
2018
|
2017
|
2016
|
||||||
Oilfield Services
|
$
|
1,003
|
|
$
|
613
|
|
$
|
132
|
|
Oilfield Equipment
|
173
|
|
187
|
|
154
|
|
|||
Turbomachinery & Process Solutions
|
156
|
|
174
|
|
186
|
|
|||
Digital Solutions
|
112
|
|
119
|
|
78
|
|
|||
Total Segment
|
1,444
|
|
1,093
|
|
550
|
|
|||
Corporate
|
42
|
|
10
|
|
—
|
|
|||
Total
|
$
|
1,486
|
|
$
|
1,103
|
|
$
|
550
|
|
Property, plant and equipment - net
|
2018
|
2017
|
2016
|
||||||
U.S.
|
$
|
2,654
|
|
$
|
3,369
|
|
$
|
833
|
|
Non-U.S.
|
3,574
|
|
3,590
|
|
1,492
|
|
|||
Total
|
$
|
6,228
|
|
$
|
6,959
|
|
$
|
2,325
|
|
|
2018
|
2017
|
2016
|
||||||
Oilfield Services
|
$
|
160
|
|
$
|
187
|
|
$
|
122
|
|
Oilfield Equipment
|
25
|
|
114
|
|
52
|
|
|||
Turbomachinery & Process Solutions
|
71
|
|
21
|
|
58
|
|
|||
Digital Solutions
|
17
|
|
34
|
|
34
|
|
|||
Corporate
|
31
|
|
29
|
|
27
|
|
|||
Total
|
$
|
304
|
|
$
|
385
|
|
$
|
293
|
|
|
2018
|
2017
|
2016
|
||||||
Property, plant & equipment, net
|
$
|
80
|
|
$
|
131
|
|
$
|
93
|
|
Employee-related termination expenses
|
123
|
|
186
|
|
111
|
|
|||
Asset relocation costs
|
28
|
|
10
|
|
17
|
|
|||
EHS remediation costs
|
6
|
|
9
|
|
20
|
|
|||
Contract termination fees
|
44
|
|
26
|
|
37
|
|
|||
Other incremental costs
|
23
|
|
23
|
|
15
|
|
|||
Total
|
$
|
304
|
|
$
|
385
|
|
$
|
293
|
|
|
2018
|
2017
|
||||
Balance at beginning of year
|
$
|
164
|
|
$
|
74
|
|
Provisions
|
47
|
|
37
|
|
||
Expenditures
|
(96
|
)
|
(44
|
)
|
||
Other
(1)
|
121
|
|
97
|
|
||
Balance at end of year
|
$
|
236
|
|
$
|
164
|
|
(1)
|
Primarily related to the acquisition of Baker Hughes.
|
|
2018
|
2017
|
||||
Balance at beginning of year
|
$
|
330
|
|
$
|
186
|
|
Additions
|
47
|
|
159
|
|
||
Amounts written off
|
(43
|
)
|
(23
|
)
|
||
Other
|
(7
|
)
|
8
|
|
||
Balance at end of year
|
$
|
327
|
|
$
|
330
|
|
(In millions, except per unit amounts)
|
First Quarter
|
Second Quarter
|
Third Quarter
|
Fourth Quarter
|
Total Year
|
||||||||||
2018
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
5,399
|
|
$
|
5,548
|
|
$
|
5,665
|
|
$
|
6,264
|
|
$
|
22,877
|
|
Gross profit
(1)
|
841
|
|
936
|
|
973
|
|
1,236
|
|
3,986
|
|
|||||
Restructuring, impairment and other
(2)
|
162
|
|
146
|
|
66
|
|
59
|
|
433
|
|
|||||
Merger and related costs
|
46
|
|
50
|
|
17
|
|
41
|
|
153
|
|
|||||
Net income (loss) attributable to Baker Hughes, a GE company, LLC
|
(143
|
)
|
(51
|
)
|
38
|
|
276
|
|
120
|
|
|||||
Cash distribution per common unit
|
0.18
|
|
0.18
|
|
0.18
|
|
0.18
|
|
0.72
|
|
|||||
|
|
|
|
|
|
||||||||||
2017
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
3,064
|
|
$
|
3,015
|
|
$
|
5,301
|
|
$
|
5,799
|
|
$
|
17,179
|
|
Gross profit
(1)
|
687
|
|
539
|
|
952
|
|
858
|
|
3,036
|
|
|||||
Restructuring, impairment and other
(2)
|
42
|
|
59
|
|
191
|
|
119
|
|
412
|
|
|||||
Merger and related costs
|
66
|
|
85
|
|
159
|
|
63
|
|
373
|
|
|||||
Net income (loss) attributable to Baker Hughes, a GE company, LLC
|
68
|
|
(25
|
)
|
(361
|
)
|
(181
|
)
|
(499
|
)
|
|||||
Cash distribution per common unit
|
—
|
|
—
|
|
0.17
|
|
0.18
|
|
0.35
|
|
(1)
|
Represents revenue less cost of sales and cost of services.
|
(2)
|
Restructuring, impairment and other costs associated with asset impairments, workforce reductions, facility closures and contract terminations recorded during 2018 and 2017. See "Note 18. Restructuring, Impairment and Other" for further discussion.
|
|
2018
|
2017
|
||||
Audit fees
|
$
|
27.9
|
|
$
|
31.8
|
|
Audit-related fees
|
0.2
|
|
0.3
|
|
||
Tax fees
|
0.1
|
|
0.3
|
|
||
All other
|
—
|
|
—
|
|
||
Total
|
$
|
28.2
|
|
$
|
32.4
|
|
|
2018
|
2017
|
||||
Audit fees
|
$
|
—
|
|
$
|
8.8
|
|
Audit-related fees
|
—
|
|
—
|
|
||
Tax fees
|
—
|
|
—
|
|
||
All other
|
—
|
|
—
|
|
||
Total
|
$
|
—
|
|
$
|
8.8
|
|
|
2018
|
2017
|
||||
Audit fees
|
$
|
—
|
|
$
|
7.2
|
|
Audit-related fees
|
|
|
||||
All other audit-related fees
|
—
|
|
0.1
|
|
||
Tax fees
|
—
|
|
0.1
|
|
||
All other
|
2.6
|
|
0.1
|
|
||
Total
|
$
|
2.6
|
|
$
|
7.5
|
|
Exhibit
Number
|
Exhibit Description
|
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
|
|
|
|
|
Date:
|
February 19, 2019
|
|
/s/ LORENZO SIMONELLI
|
|
|
|
Lorenzo Simonelli
Chairman, Baker Hughes, a GE company
President and Chief Executive Officer
|
Signature
|
|
Title
|
|
|
|
/s/ LORENZO SIMONELLI
|
|
Chairman, Baker Hughes, a GE company
President and Chief Executive Officer
|
(Lorenzo Simonelli)
|
|
(principal executive officer)
|
|
|
|
/
S
/ BRIAN WORRELL
|
|
Chief Financial Officer
|
(Brian Worrell)
|
|
(principal financial officer)
|
|
|
|
/
S
/ KURT CAMILLERI
|
|
Vice President, Controller and Chief Accounting Officer
|
(Kurt Camilleri)
|
|
(principal accounting officer)
|
Signature
|
|
Title
|
|
|
|
/s/ W. GEOFFREY BEATTIE
|
|
Director, Baker Hughes, a GE company
|
(W. Geoffrey Beattie)
|
|
|
|
|
|
/s/ GREGORY D. BRENNEMAN
|
|
Director, Baker Hughes, a GE company
|
(Gregory D. Brenneman)
|
|
|
|
|
|
/s/ CLARENCE P. CAZALOT, JR.
|
|
Director, Baker Hughes, a GE company
|
(Clarence P. Cazalot, Jr.)
|
|
|
|
|
|
/s/ MARTIN S. CRAIGHEAD
|
|
Vice Chairman of the Board, Baker Hughes, a GE company
|
(Martin S. Craighead)
|
|
|
|
|
|
/s/ LYNN L. ELSENHANS
|
|
Director, Baker Hughes, a GE company
|
(Lynn L. Elsenhans)
|
|
|
|
|
|
/s/ JAMIE S. MILLER
|
|
Director, Baker Hughes, a GE company
|
(Jamie S. Miller)
|
|
|
|
|
|
/s/ JAMES J. MULVA
|
|
Director, Baker Hughes, a GE company
|
(James J. Mulva)
|
|
|
|
|
|
/s/ JOHN G. RICE
|
|
Director, Baker Hughes, a GE company
|
(John G. Rice)
|
|
|
|
|
|
Email:
|
Attention:
|
Doreen E. Lilienfeld
Gillian Emmett Moldowan |
Email:
|
By:
|
/s/ James M. Waterbury
Name: James M. Waterbury Title: Vice President |
By:
|
/s/ Lee Whitley
Name: Lee Whitley Title: Corporate Secretary |
By:
|
/s/ Lee Whitley
Name: Lee Whitley Title: Corporate Secretary |
(A)
|
Liability Amount
|
(B)
|
GMP equalization reserve
|
(i)
|
a proportionate share of the reserve prescribed under the Statement of Funding Principles (in respect of the March 31, 2018 valuation), relating to the potential requirement to equalize some of the Transferred Liabilities for the effect of guaranteed minimum pensions; and
|
(C)
|
GMP equalization adjustment
|
Date:
|
February 19, 2019
|
By:
|
|
/s/ Lorenzo Simonelli
|
|
|
|
|
Lorenzo Simonelli
Chairman, Baker Hughes, a GE company
President and Chief Executive Officer
|
Date:
|
February 19, 2019
|
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:
|
|
Chairman, Baker Hughes, a GE company
President and Chief Executive Officer
|
Date:
|
|
February 19, 2019
|
|
|
|
|
|
/s/ Brian Worrell
|
Name:
|
|
Brian Worrell
|
Title:
|
|
Chief Financial Officer
|
Date:
|
|
February 19, 2019
|
(1)
|
Amounts included are the total dollar value of proposed assessments received from MSHA on or before December 31, 2018 for citations and orders occurring during the year ended December 31, 2018, 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.
|