Delaware
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81-4403168
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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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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Title of each class
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Name of each exchange on which registered
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Class A Common Stock, $0.0001 Par Value per Share
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New York Stock Exchange
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Class B Common Stock, $0.0001 Par Value per Share
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-
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Large accelerated filer
þ
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Emerging growth company
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(Do not check if a smaller reporting company)
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We intend to build market leading product companies focused on comprehensively reducing product and service costs, while improving equipment efficiency and reliability to significantly lower project breakeven costs.
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We strive to create value through integrated and differentiated equipment and service modules that will impact our customers total cost of projects and operations as well as fundamentally improving industry productivity, and
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We plan to continue to develop fullstream opportunities that drive value creation through radical improvements in total cost reduction and productivity increases for the industry.
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Complete fullstream portfolio.
Leading portfolio capable of serving upstream, midstream and downstream sectors of the oil and gas industry, matching oilfield service and equipment leaders in many areas. Our four product lines - Oilfield Services; Oilfield Equipment; Turbomachinery & Process Solutions; and Digital Solutions, as discussed below under "Products and Services," are each among the top four providers in their respective segments.
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Complementary technology.
We have a culture built on a heritage of innovation and invention in research and development, with complementary capabilities. Technology remains a differentiator and enables us to deliver across the value chain. Given our breadth and depth, we can leverage our technology, talent and expertise across our portfolio to accelerate the pace of innovation.
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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.
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•
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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.
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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.
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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.
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Scheduled repair and maintenance of offshore facilities in the North Sea can reduce activity in the second and third quarters.
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Many of our international oilfield customers increase orders for certain products and services in the fourth quarter.
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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.
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Our broader DS business typically experiences higher customer activity as a result of spending patterns in the second half of the year.
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Name
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Age
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Position and Background
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Lorenzo Simonelli
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44
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Chairman, President and Chief Executive Officer
Lorenzo Simonelli has been the Chairman of the Board of Directors of the Company since October 2017, and a Director, President and 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.
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Brian Worrell
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48
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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.
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Maria Claudia Borras
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49
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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.
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Kurt Camilleri
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43
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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.
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Roderick Christie
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55
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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.
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Name
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Age
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Position and Background
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Matthias Heilmann
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49
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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.
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William D. Marsh
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55
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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.
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Derek Mathieson
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47
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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.
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Neil Saunders
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48
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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.
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Uwem Ukpong
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46
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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.
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we may not be able to continue to obtain insurance on commercially reasonable terms;
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we may be faced with types of liabilities that will not be covered by our insurance;
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our insurance carriers may not be able to meet their obligations under the policies; or
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the dollar amount of any liabilities may exceed our policy limits.
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Oilfield Services:
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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; Luanda, Angola; Port Harcourt, Nigeria
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Oilfield Equipment:
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Houston and Humble, Texas - located in the United States; Montrose, Scotland; Nailsea, England; Niteroi, Brazil; Suzhou, China; Dammam, Saudi Arabia
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Turbomachinery & Process Solutions:
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Deer Park, Texas and Jacksonville, Florida - located in the United States; Florence and Massa, Italy; Le Creusot, France; Coimbatore, India
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Digital Solutions:
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Billerica, Massachusetts and Minden, Nevada - located in the United States; Groby, England; Shannon, Ireland; Hurth Germany
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Period
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Total Number
of Shares
Purchased (1) |
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Average
Price Paid
Per Share
(2)
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Total Number of
Shares Purchased as
Part of a Publicly
Announced Plan or Programs
(3)
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Maximum Dollar Value
of Shares that May Yet Be
Purchased Under the Plan or Programs
(4)
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October 1-31, 2017
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10,121
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$
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36.64
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—
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$
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—
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November 1-30, 2017
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1,761,106
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30.46
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1,759,086
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$
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1,071,428,624
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December 1-31, 2017
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4,289,714
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31.24
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4,287,649
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$
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937,500,428
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Total
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6,060,941
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$
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31.02
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6,046,735
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(1)
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Represents Class A common stock purchased from employees to satisfy the tax withholding obligations in connection with the vesting of restricted stock units and shares purchased in the open market under our publicly announced purchase program.
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(2)
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Average price paid for Class A common stock purchased from employees to satisfy the tax withholding obligations in connection with the vesting of restricted stock units and shares purchased in the open market under our publicly announced purchase program, which includes commissions.
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(3)
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On November 2, 2017, our board of directors authorized BHGE LLC to repurchase up to $3 billion of its common units from the Company and GE. The proceeds of this repurchase are to be used by BHGE to repurchase Class A common stock of the Company on the open market, which if fully implemented would result in the repurchase of approximately $1.1 billion of Class A common stock. The Class B common stock of the Company, that is paired with repurchased common units, was repurchased by the Company at par value. BHGE LLC had authorization remaining to repurchase up to approximately $2.5 billion of its common units from BHGE and GE at December 31, 2017.
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(4)
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During the three months ended December 31, 2017, we repurchased and canceled approximately six million shares of Class A common stock at an average price of $31.01 per share (including commissions) for a total of $187 million. We also repurchased and canceled approximately ten million shares of Class B common stock from GE that is paired with common units of BHGE LLC for $314 million.
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2012
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2013
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2014
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2015
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2016
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July 3, 2017
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||||||||||||
Baker Hughes Incorporated
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$
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100.00
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$
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136.96
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$
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140.44
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$
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116.93
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$
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166.99
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$
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149.09
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S&P 500 Index
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100.00
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132.39
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150.51
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152.59
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170.84
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187.24
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S&P 500 Oil and Gas Equipment and Services Index
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100.00
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130.65
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120.46
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97.87
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129.12
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151.59
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July 5, 2017
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December 31, 2017
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BHGE
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$
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100.00
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$
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85.84
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S&P 500 Index
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100.00
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110.97
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S&P 500 Oil and Gas Equipment and Services Index
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100.00
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106.02
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Year Ended December 31,
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|||||||||||
(In millions, except per share amounts)
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2017
(1)
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2016
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2015
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2014
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||||||||
Revenue
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$
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17,259
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$
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13,269
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$
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16,688
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$
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19,191
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||||||||
Cost of revenue
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14,046
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10,123
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12,193
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14,256
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Selling, general and administrative
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2,535
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1,938
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2,115
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2,288
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Restructuring, impairment and other
(2)
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412
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516
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411
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189
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Goodwill impairment
(3)
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—
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—
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2,080
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—
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Merger and related costs
(4)
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373
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33
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27
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67
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Operating income (loss)
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(107
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)
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659
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(138
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)
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2,391
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Other non operating income, net
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78
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27
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100
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124
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Interest expense, net
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(131
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)
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(102
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)
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(120
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)
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(179
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)
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Income (loss) before income taxes and equity in loss of affiliate
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(160
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)
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584
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(158
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)
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2,336
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||||
Equity in loss of affiliate
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(11
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)
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—
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|
—
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—
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||||
Income tax provision
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(71
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)
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(250
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)
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(473
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)
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(484
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)
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Net income (loss)
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(242
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)
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334
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(631
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)
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1,852
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Less: Net income (loss) attributable to GE O&G pre-merger
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109
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403
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(606
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)
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1,840
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Less: Net income (loss) attributable to noncontrolling interests
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(278
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)
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(69
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)
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(25
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)
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12
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Net loss attributable to Baker Hughes, a GE company
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$
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(73
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)
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$
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—
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|
$
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—
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$
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—
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||||||||
Per share of common stock:
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||||||||
Basic and diluted loss per Class A common share
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$
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(0.17
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)
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||||||
Dividend:
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||||||||
Cash dividend per Class A common share
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0.35
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Special dividend per Class A common share
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17.50
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|||||||
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||||||||
Balance Sheet Data:
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||||||||
Cash and equivalents
(5)
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$
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7,023
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$
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981
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$
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1,432
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$
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1,390
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Total assets
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57,050
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21,721
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23,133
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26,496
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||||
Long-term debt
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6,312
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38
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13
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14
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||||
Total equity
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39,173
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14,855
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14,545
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16,386
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(1)
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The current year results are not comparable to prior years as they include the results of Baker Hughes from July 3, 2017.
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(2)
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See "Note 18. Restructuring, Impairment and Other" of the Notes to Consolidated and Combined Financial Statements in Item 8 herein for further discussion.
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(3)
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Goodwill impairment recognized in our OFS operating segment. See "Note 6. Goodwill and Intangible Assets" of the Notes to Consolidated and Combined Financial Statements in Item 8 herein for further discussion.
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(4)
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See "Note 2. Business Acquisition" of the Notes to Consolidated and Combined Financial Statements in Item 8 herein for further discussion.
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(5)
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Cash and equivalents includes $997 million of cash held on behalf of GE at December 31, 2017.
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•
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North America onshore activity: in 2017, we experienced an acceleration in rig count growth, as compared to 2016. We expect the increased activity in North America to continue to grow in 2018, however, at a slower pace than seen in 2017. We remain optimistic about the outlook.
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•
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International onshore activity: we have seen a moderate increase in rig count activity in 2017 and expect growth to continue into 2018, at a moderate 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.
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•
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Offshore projects: although commodity prices increased in 2017, we have yet to see a change in customer spending behavior, as a result of continued oil price volatility. We expect final investment decisions to continue to remain fluid. We have seen an increase in subsea tree awards in 2017, and expect tree awards to increase in 2018, but still at levels significantly below prior 2012 & 2013 peaks, as customers continue to remain cautious with regards to major capital expenditures for the near term.
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•
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Liquefied Natural Gas (LNG) projects: we believe the market continues to be oversupplied, and will remain in its current state for the next few years. We expect some final investment decisions to move forward in
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•
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Refinery, petrochemical and industrial projects: in refining, we believe large, complex refineries should gain advantage in a more competitive, oversupplied landscape in 2018 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 2018. 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 2018.
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2017
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2016
|
|
2015
|
||||||
Brent oil prices ($/Bbl)
(1)
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$
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54.12
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$
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43.64
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$
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52.32
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WTI oil prices ($/Bbl)
(2)
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50.80
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|
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43.29
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|
|
48.66
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Natural gas prices ($/mmBtu)
(3)
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2.99
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|
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2.52
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|
|
2.62
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(1)
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Energy Information Administration (EIA) Europe Brent Spot Price per Barrel
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(2)
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EIA Cushing, OK WTI (West Texas Intermediate) spot price
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(3)
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EIA Henry Hub Natural Gas Spot Price per million British Thermal Unit
|
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2017
|
|
2016
|
|
2015
|
|||
North America
|
1,082
|
|
|
642
|
|
|
1,178
|
|
International
|
948
|
|
|
956
|
|
|
1,168
|
|
Worldwide
|
2,030
|
|
|
1,598
|
|
|
2,346
|
|
|
Year Ended December 31,
|
$ Change
|
|||||||||||||
|
2017
|
2016
|
2015
|
From 2016 to 2017
|
From 2015 to 2016
|
||||||||||
Revenue:
|
|
|
|
|
|
||||||||||
Oilfield Services
|
$
|
5,851
|
|
$
|
799
|
|
$
|
1,411
|
|
$
|
5,052
|
|
$
|
(612
|
)
|
Oilfield Equipment
|
2,637
|
|
3,547
|
|
5,060
|
|
(910
|
)
|
(1,513
|
)
|
|||||
Turbomachinery & Process Solutions
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6,463
|
|
6,837
|
|
7,985
|
|
(374
|
)
|
(1,148
|
)
|
|||||
Digital Solutions
|
2,309
|
|
2,086
|
|
2,232
|
|
223
|
|
(146
|
)
|
|||||
Total
|
$
|
17,259
|
|
$
|
13,269
|
|
$
|
16,688
|
|
$
|
3,990
|
|
$
|
(3,419
|
)
|
|
Year Ended December 31,
|
$ Change
|
|||||||||||||
|
2017
|
2016
|
2015
|
From 2016 to 2017
|
From 2015 to 2016
|
||||||||||
Segment operating income (loss):
|
|
|
|
|
|
||||||||||
Oilfield Services
|
$
|
71
|
|
$
|
(204
|
)
|
$
|
(79
|
)
|
$
|
275
|
|
$
|
(125
|
)
|
Oilfield Equipment
|
38
|
|
320
|
|
677
|
|
(282
|
)
|
(357
|
)
|
|||||
Turbomachinery & Process Solutions
|
853
|
|
1,255
|
|
1,684
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(402
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)
|
(429
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)
|
|||||
Digital Solutions
|
333
|
|
355
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|
409
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(22
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)
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(54
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)
|
|||||
Total segment operating income (loss)
|
1,295
|
|
1,726
|
|
2,691
|
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(431
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)
|
(965
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)
|
|||||
Corporate
|
(373
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)
|
(380
|
)
|
(260
|
)
|
7
|
|
(120
|
)
|
|||||
Inventory impairment and related charges
(1)
|
(244
|
)
|
(138
|
)
|
(51
|
)
|
(106
|
)
|
(87
|
)
|
|||||
Restructuring, impairment and other
|
(412
|
)
|
(516
|
)
|
(411
|
)
|
104
|
|
(105
|
)
|
|||||
Goodwill impairment
|
—
|
|
—
|
|
(2,080
|
)
|
—
|
|
2,080
|
|
|||||
Merger and related costs
|
(373
|
)
|
(33
|
)
|
(27
|
)
|
(340
|
)
|
(6
|
)
|
|||||
Operating income (loss)
|
(107
|
)
|
659
|
|
(138
|
)
|
(766
|
)
|
797
|
|
|||||
Other non operating income, net
|
78
|
|
27
|
|
100
|
|
51
|
|
(73
|
)
|
|||||
Interest expense, net
|
(131
|
)
|
(102
|
)
|
(120
|
)
|
(29
|
)
|
18
|
|
|||||
Income (loss) before income taxes and equity in loss of affiliate
|
(160
|
)
|
584
|
|
(158
|
)
|
(744
|
)
|
742
|
|
|||||
Equity in loss of affiliate
|
(11
|
)
|
—
|
|
—
|
|
(11
|
)
|
—
|
|
|||||
Provision for income taxes
|
(71
|
)
|
(250
|
)
|
(473
|
)
|
179
|
|
223
|
|
|||||
Net income (loss)
|
$
|
(242
|
)
|
$
|
334
|
|
$
|
(631
|
)
|
$
|
(576
|
)
|
$
|
965
|
|
(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)
|
2017
|
2016
|
2015
|
||||||
Operating activities
|
$
|
(799
|
)
|
$
|
262
|
|
$
|
1,277
|
|
Investing activities
|
(4,130
|
)
|
(472
|
)
|
(466
|
)
|
|||
Financing activities
|
10,919
|
|
(102
|
)
|
(515
|
)
|
|
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)
|
$
|
8,081
|
|
|
$
|
2,013
|
|
|
$
|
56
|
|
|
$
|
1,729
|
|
|
$
|
4,283
|
|
Estimated interest payments
(2)
|
4,018
|
|
|
274
|
|
|
481
|
|
|
461
|
|
|
2,802
|
|
|||||
Operating leases
(3)
|
688
|
|
|
156
|
|
|
214
|
|
|
130
|
|
|
188
|
|
|||||
Purchase obligations
(4)
|
1,121
|
|
|
962
|
|
|
87
|
|
|
59
|
|
|
13
|
|
|||||
Total
|
$
|
13,908
|
|
|
$
|
3,405
|
|
|
$
|
838
|
|
|
$
|
2,379
|
|
|
$
|
7,286
|
|
(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
$1,124 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 capital improvements for 2018 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.
|
(In millions)
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
(2)
|
||||||||||||||
As of December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Long-term debt
(1)
|
$
|
615
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
513
|
|
|
$
|
1,250
|
|
|
$
|
4,196
|
|
|
$
|
6,574
|
|
Weighted average interest rates
|
2.15
|
%
|
|
—
|
%
|
|
—
|
%
|
|
2.47
|
%
|
|
2.87
|
%
|
|
3.88
|
%
|
|
3.42
|
%
|
(1)
|
Fair market value of our fixed rate long-term debt, excluding capital leases, was $7.0 billion at
December 31, 2017
.
|
(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
Chairman, 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 share amounts)
|
2017
|
2016
|
2015
|
||||||
Revenue:
|
|
|
|
||||||
Sales of goods
|
$
|
10,898
|
|
$
|
9,488
|
|
$
|
12,353
|
|
Sales of services
|
6,361
|
|
3,781
|
|
4,335
|
|
|||
Total revenue
|
17,259
|
|
13,269
|
|
16,688
|
|
|||
Costs and expenses:
|
|
|
|
||||||
Cost of goods sold
|
9,402
|
|
7,816
|
|
9,271
|
|
|||
Cost of services sold
|
4,644
|
|
2,307
|
|
2,922
|
|
|||
Selling, general and administrative expenses
|
2,535
|
|
1,938
|
|
2,115
|
|
|||
Restructuring, impairment and other
|
412
|
|
516
|
|
411
|
|
|||
Goodwill impairment
|
—
|
|
—
|
|
2,080
|
|
|||
Merger and related costs
|
373
|
|
33
|
|
27
|
|
|||
Total costs and expenses
|
17,366
|
|
12,610
|
|
16,826
|
|
|||
Operating income (loss)
|
(107
|
)
|
659
|
|
(138
|
)
|
|||
Other non operating income, net
|
78
|
|
27
|
|
100
|
|
|||
Interest expense, net
|
(131
|
)
|
(102
|
)
|
(120
|
)
|
|||
Income (loss) before income taxes and equity in loss of affiliate
|
(160
|
)
|
584
|
|
(158
|
)
|
|||
Equity in loss of affiliate
|
(11
|
)
|
—
|
|
—
|
|
|||
Provision for income taxes
|
(71
|
)
|
(250
|
)
|
(473
|
)
|
|||
Net income (loss)
|
(242
|
)
|
334
|
|
(631
|
)
|
|||
Less: Net income (loss) attributable to GE O&G pre-merger
|
109
|
|
403
|
|
(606
|
)
|
|||
Less: Net loss attributable to noncontrolling interests
|
(278
|
)
|
(69
|
)
|
(25
|
)
|
|||
Net loss attributable to Baker Hughes, a GE company
|
$
|
(73
|
)
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
||||||
Per share amounts:
|
|
|
|
||||||
Basic and diluted loss per Class A common share
|
$
|
(0.17
|
)
|
|
|
||||
|
|
|
|
||||||
Cash dividend per Class A common share
|
$
|
0.35
|
|
|
|
||||
Special dividend per Class A common share
|
$
|
17.50
|
|
|
|
|
Year Ended December 31,
|
||||||||
(In millions)
|
2017
|
2016
|
2015
|
||||||
Net income (loss)
|
$
|
(242
|
)
|
$
|
334
|
|
$
|
(631
|
)
|
Less: Net income (loss) attributable to GE O&G pre-merger
|
109
|
|
403
|
|
(606
|
)
|
|||
Less: Net loss attributable to noncontrolling interests
|
(278
|
)
|
(69
|
)
|
(25
|
)
|
|||
Net loss attributable to Baker Hughes, a GE company
|
(73
|
)
|
—
|
|
—
|
|
|||
Other comprehensive (loss) income:
|
|
|
|
||||||
Investment securities
|
4
|
|
—
|
|
—
|
|
|||
Foreign currency translation adjustments
|
(3
|
)
|
(422
|
)
|
(617
|
)
|
|||
Cash flow hedges
|
12
|
|
(8
|
)
|
(2
|
)
|
|||
Benefit plans
|
55
|
|
54
|
|
40
|
|
|||
Other comprehensive income (loss)
|
68
|
|
(376
|
)
|
(579
|
)
|
|||
Less: Other comprehensive loss attributable to GE O&G pre-merger
|
(62
|
)
|
(362
|
)
|
(568
|
)
|
|||
Less: Other comprehensive income (loss) attributable to noncontrolling interests
|
83
|
|
(14
|
)
|
(11
|
)
|
|||
Other comprehensive income attributable Baker Hughes, a GE company
|
47
|
|
—
|
|
—
|
|
|||
Comprehensive loss
|
(174
|
)
|
(42
|
)
|
(1,210
|
)
|
|||
Less: Comprehensive income (loss) attributable to GE O&G pre-merger
|
47
|
|
41
|
|
(1,174
|
)
|
|||
Less: Comprehensive loss attributable to noncontrolling interests
|
(195
|
)
|
(83
|
)
|
(36
|
)
|
|||
Comprehensive loss attributable to Baker Hughes, a GE company
|
$
|
(26
|
)
|
$
|
—
|
|
$
|
—
|
|
|
||||||
|
December 31,
|
|||||
(In millions, except par value)
|
2017
|
2016
|
||||
ASSETS
|
||||||
Current Assets:
|
|
|
||||
Cash and equivalents
(1)
|
$
|
7,023
|
|
$
|
981
|
|
Current receivables, net
|
6,014
|
|
2,563
|
|
||
Inventories, net
|
4,590
|
|
3,224
|
|
||
All other current assets
|
872
|
|
633
|
|
||
Total current assets
|
18,499
|
|
7,401
|
|
||
Property, plant and equipment, less accumulated depreciation
|
6,959
|
|
2,325
|
|
||
Goodwill
|
19,927
|
|
6,680
|
|
||
Other intangible assets, net
|
6,358
|
|
2,449
|
|
||
Contract assets
|
2,745
|
|
1,967
|
|
||
All other assets
|
2,080
|
|
573
|
|
||
Deferred income taxes
|
482
|
|
326
|
|
||
Total assets
|
$
|
57,050
|
|
$
|
21,721
|
|
LIABILITIES AND EQUITY
|
||||||
Current Liabilities:
|
|
|
||||
Accounts payable
|
$
|
3,377
|
|
$
|
1,898
|
|
Short-term debt and current portion of long-term debt
(1)
|
2,037
|
|
239
|
|
||
Progress collections
|
1,381
|
|
1,596
|
|
||
All other current liabilities
|
2,102
|
|
1,201
|
|
||
Total current liabilities
|
8,897
|
|
4,934
|
|
||
Long-term debt
|
6,312
|
|
38
|
|
||
Deferred income taxes
|
524
|
|
880
|
|
||
Liabilities for pensions and other employee benefits
|
1,172
|
|
519
|
|
||
All other liabilities
|
972
|
|
495
|
|
||
Equity:
|
|
|
||||
Class A common stock, $0.0001 par value - 2,000 authorized, 422 issued and outstanding as of December 31, 2017
|
—
|
|
—
|
|
||
Class B common stock, $0.0001 par value - 1,250 authorized, 707 issued and outstanding as of December 31, 2017
|
—
|
|
—
|
|
||
Capital in excess of par value
|
15,483
|
|
—
|
|
||
Parent's net investment
|
—
|
|
16,582
|
|
||
Retained loss
|
(73
|
)
|
—
|
|
||
Accumulated other comprehensive loss
|
(701
|
)
|
(1,894
|
)
|
||
Baker Hughes, a GE company equity
|
14,709
|
|
14,688
|
|
||
Noncontrolling interests
|
24,464
|
|
167
|
|
||
Total equity
|
39,173
|
|
14,855
|
|
||
Total liabilities and equity
|
$
|
57,050
|
|
$
|
21,721
|
|
(1)
|
Total assets include
$1,124 million
of assets held on behalf of GE, of which
$997 million
is cash and equivalents and
$127 million
is investment securities at December 31, 2017 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 share amounts)
|
Class A Common Stock
|
Class B Common Stock
|
Capital in Excess of Par Value
|
Parent's Net Investment
|
Retained Loss
|
Accumulated Other Comprehensive Loss
|
Non-controlling Interests
|
Total
|
||||||||||||||||
Balance at December 31, 2014
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
17,169
|
|
$
|
—
|
|
$
|
(964
|
)
|
$
|
181
|
|
$
|
16,386
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net loss
|
|
|
|
|
(606
|
)
|
|
|
(25
|
)
|
(631
|
)
|
||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
(568
|
)
|
(11
|
)
|
(579
|
)
|
|||||||||||
Changes in Parent's net investment
|
|
|
|
|
(643
|
)
|
|
|
|
|
(643
|
)
|
||||||||||||
Net activity related to noncontrolling interests
|
|
|
|
|
|
|
|
12
|
|
12
|
|
|||||||||||||
Balance at December 31, 2015
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
15,920
|
|
$
|
—
|
|
$
|
(1,532
|
)
|
$
|
157
|
|
$
|
14,545
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income (loss)
|
|
|
|
|
|
403
|
|
|
|
(69
|
)
|
334
|
|
|||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
(362
|
)
|
(14
|
)
|
(376
|
)
|
||||||||||
Changes in Parent's net investment
|
|
|
|
|
|
259
|
|
|
|
|
|
|
259
|
|
||||||||||
Net activity related to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
93
|
|
93
|
|
|||||||||||
Balance at December 31, 2016
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
16,582
|
|
$
|
—
|
|
$
|
(1,894
|
)
|
$
|
167
|
|
$
|
14,855
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income
|
|
|
|
|
|
109
|
|
|
|
4
|
|
113
|
|
|||||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
(62
|
)
|
4
|
|
(58
|
)
|
|||||||||||
Changes in Parent's net investment
|
|
|
|
|
|
803
|
|
|
(13
|
)
|
|
790
|
|
|||||||||||
Net activity related to noncontrolling interests
|
|
|
|
|
|
|
|
|
4
|
|
4
|
|
||||||||||||
Cash contribution received from GE
|
|
|
|
|
|
7,400
|
|
|
|
|
7,400
|
|
||||||||||||
Conversion of Parent's net investment into noncontrolling interest and issuance of Class B common stock
|
|
|
|
|
|
(24,894
|
)
|
|
|
24,894
|
|
—
|
|
|||||||||||
Issuance of Class A common stock on acquisition of Baker Hughes
|
|
|
|
|
24,798
|
|
|
|
|
76
|
|
24,874
|
|
|||||||||||
Special dividend ($17.5 per share)
|
|
|
|
|
(7,498
|
)
|
|
|
|
|
(7,498
|
)
|
||||||||||||
Reallocation of equity based on ownership of GE and previous Baker Hughes stockholders
|
|
|
|
|
(1,451
|
)
|
|
|
1,234
|
|
217
|
|
—
|
|
||||||||||
Activity after business combination of July 3, 2017:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net loss
|
|
|
|
|
|
|
(73
|
)
|
|
(282
|
)
|
(355
|
)
|
|||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
47
|
|
79
|
|
126
|
|
|||||||||||
Stock-based compensation cost
|
|
|
|
|
37
|
|
|
|
|
|
37
|
|
||||||||||||
Cash dividends ($0.35 per share)
|
|
|
|
|
(155
|
)
|
|
|
|
(251
|
)
|
(406
|
)
|
|||||||||||
Net activity related to noncontrolling interests
|
|
|
|
|
(61
|
)
|
|
|
(13
|
)
|
(134
|
)
|
(208
|
)
|
||||||||||
Repurchase and cancellation of Class A and Class B common stock
|
|
|
(187
|
)
|
|
|
|
(314
|
)
|
(501
|
)
|
|||||||||||||
Balance at December 31, 2017
|
$
|
—
|
|
$
|
—
|
|
$
|
15,483
|
|
$
|
—
|
|
$
|
(73
|
)
|
$
|
(701
|
)
|
$
|
24,464
|
|
$
|
39,173
|
|
|
Year Ended December 31,
|
||||||||
(In millions)
|
2017
|
2016
|
2015
|
||||||
Cash flows from operating activities:
|
|
|
|
||||||
Net income (loss)
|
$
|
(242
|
)
|
$
|
334
|
|
$
|
(631
|
)
|
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
|
|
|
|
||||||
Depreciation and amortization
|
1,103
|
|
550
|
|
530
|
|
|||
Goodwill impairment
|
—
|
|
—
|
|
2,080
|
|
|||
Provision for deferred income taxes
|
(304
|
)
|
39
|
|
(96
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
||||||
Current receivables
|
(1,190
|
)
|
278
|
|
469
|
|
|||
Inventories
|
392
|
|
345
|
|
442
|
|
|||
Accounts payable
|
303
|
|
(256
|
)
|
(450
|
)
|
|||
Progress collections
|
(232
|
)
|
(714
|
)
|
(867
|
)
|
|||
Deferred charges
|
(570
|
)
|
(292
|
)
|
(87
|
)
|
|||
Other operating items, net
|
(59
|
)
|
(22
|
)
|
(113
|
)
|
|||
Net cash flows from (used in) operating activities
|
(799
|
)
|
262
|
|
1,277
|
|
|||
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
||||||
Expenditures for capital assets
|
(665
|
)
|
(424
|
)
|
(607
|
)
|
|||
Proceeds from disposal of assets
|
172
|
|
20
|
|
30
|
|
|||
Proceeds from business dispositions
|
20
|
|
—
|
|
181
|
|
|||
Net cash paid for acquisitions
|
(3,365
|
)
|
(1
|
)
|
(86
|
)
|
|||
Other investing items, net
|
(292
|
)
|
(67
|
)
|
16
|
|
|||
Net cash flows used in investing activities
|
(4,130
|
)
|
(472
|
)
|
(466
|
)
|
|||
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
||||||
Net borrowings (repayments) of short-term borrowings
|
(663
|
)
|
(156
|
)
|
177
|
|
|||
Proceeds from the issuance of long-term debt
|
3,928
|
|
—
|
|
—
|
|
|||
Repayments of long-term debt
|
(177
|
)
|
—
|
|
—
|
|
|||
Net transfer from Parent
|
1,498
|
|
191
|
|
(708
|
)
|
|||
Contribution received from GE
|
7,400
|
|
—
|
|
—
|
|
|||
Dividends paid
|
(155
|
)
|
—
|
|
—
|
|
|||
Distributions to noncontrolling interest
|
(251
|
)
|
—
|
|
—
|
|
|||
Repurchase of Class A common stock
|
(174
|
)
|
—
|
|
—
|
|
|||
Repurchase of GE common units by BHGE LLC
|
(303
|
)
|
—
|
|
—
|
|
|||
Other financing items, net
|
(184
|
)
|
(137
|
)
|
16
|
|
|||
Net cash flows from (used in) financing activities
|
10,919
|
|
(102
|
)
|
(515
|
)
|
|||
Effect of currency exchange rate changes on cash and equivalents
|
52
|
|
(139
|
)
|
(254
|
)
|
|||
Increase (decrease) in cash and equivalents
|
6,042
|
|
(451
|
)
|
42
|
|
|||
Cash and equivalents, beginning of period
|
981
|
|
1,432
|
|
1,390
|
|
|||
Cash and equivalents, end of period
|
$
|
7,023
|
|
$
|
981
|
|
$
|
1,432
|
|
|
|
|
|
||||||
Supplemental cash flows disclosures:
|
|
|
|
||||||
Income taxes paid, net of refunds
|
$
|
230
|
|
$
|
317
|
|
$
|
264
|
|
Interest paid
|
$
|
109
|
|
$
|
55
|
|
$
|
52
|
|
•
|
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.
|
Purchase consideration
|
|
||
(In millions, except share and per share amounts)
|
July 3, 2017
|
||
Baker Hughes shares outstanding
|
426,097,407
|
|
|
Restricted stock units vested upon closing
|
1,611,566
|
|
|
Total Baker Hughes shares outstanding for purchase consideration
|
427,708,973
|
|
|
Baker Hughes share price on July 3, 2017 per share
|
$
|
57.68
|
|
Purchase consideration
|
$
|
24,670
|
|
Rollover of outstanding options into options to purchase Class A shares (fair value)
|
$
|
114
|
|
Precombination service of restricted stock units (fair value)
|
$
|
14
|
|
Total purchase consideration
|
$
|
24,798
|
|
Preliminary identifiable assets acquired and liabilities assumed
|
Estimated fair value at July 3, 2017
|
||
Assets
|
|
||
Cash and equivalents
|
$
|
4,133
|
|
Current receivables
|
2,383
|
|
|
Inventories
(1)
|
1,695
|
|
|
Property, plant and equipment
|
4,868
|
|
|
Intangible assets
(2)
|
4,123
|
|
|
All other assets
|
1,544
|
|
|
Liabilities
|
|
||
Accounts payable
|
$
|
(1,106
|
)
|
Borrowings
|
(3,370
|
)
|
|
Deferred income taxes
(3)
|
(317
|
)
|
|
Liabilities for pension and other postretirement benefits
|
(655
|
)
|
|
All other liabilities
|
(1,476
|
)
|
|
Total identifiable net assets
|
$
|
11,822
|
|
Noncontrolling interest associated with net assets acquired
|
(76
|
)
|
|
Goodwill
(4)
|
13,052
|
|
|
Total purchase consideration
|
$
|
24,798
|
|
(1)
|
Includes
$87 million
of adjustments to write-up the acquired inventory to its estimated fair value. Cost of goods sold in 2017 reflects this increased valuation as this inventory was used or sold in the period from July 3, 2017 to December 31, 2017.
|
(2)
|
Intangible assets, as provided in the table below, are recorded at estimated fair value, as determined by management based on available information which includes a preliminary valuation. The estimated useful lives for intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to future cash flows. We consider the Baker Hughes trade name to be an indefinite life intangible asset, which will not be amortized and will be subject to an annual impairment test.
|
|
Estimated Fair Value
|
Estimated Weighted
Average Life (Years) |
||
Trademarks - Baker Hughes
|
$
|
2,100
|
|
Indefinite life
|
Customer-related
|
1,260
|
|
15
|
|
Patents and technology
|
550
|
|
10
|
|
Trademarks - Other
|
70
|
|
10
|
|
Capitalized software
|
90
|
|
3-7
|
|
In-process research and development
|
45
|
|
Indefinite life
|
|
Favorable lease contracts
|
8
|
|
10
|
|
Total
|
$
|
4,123
|
|
|
(3)
|
Includes approximately
$560 million
of net deferred tax liabilities related to the estimated fair value of intangible assets included in the preliminary purchase consideration and approximately
$243 million
of other net deferred tax assets, including non-U.S. loss carryforwards net of valuation allowances and offsetting liabilities for unrecognized benefits.
|
(4)
|
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 preliminarily allocated to the Oilfield Services segment, of which
$67 million
is deductible for tax purposes.
|
|
2017
|
2016
|
||||
Revenue
|
$
|
21,921
|
|
$
|
23,102
|
|
Net loss
|
(335
|
)
|
(2,734
|
)
|
||
Net loss attributable to the Company
|
(92
|
)
|
(998
|
)
|
||
Loss per Class A share - basic and diluted
(1)
|
(0.22
|
)
|
(2.33
|
)
|
(1)
|
The calculation of diluted loss per Class A share excludes shares potentially issuable under stock-based incentive compensation plans and the exchange of Class B shares with Class A shares under the Exchange Agreement, as their effect, if included, would be antidilutive.
|
|
2017
|
2016
|
||||
Customer receivables
|
$
|
4,699
|
|
$
|
1,699
|
|
Related parties
|
801
|
|
392
|
|
||
Other
|
844
|
|
658
|
|
||
Total current receivables
|
6,344
|
|
2,749
|
|
||
Less: Allowance for doubtful accounts
|
(330
|
)
|
(186
|
)
|
||
Total current receivables, net
|
$
|
6,014
|
|
$
|
2,563
|
|
|
2017
|
2016
|
||||
Finished goods
|
$
|
2,597
|
|
$
|
1,585
|
|
Work in process and raw materials
|
1,993
|
|
1,639
|
|
||
Total inventories, net
|
$
|
4,590
|
|
$
|
3,224
|
|
|
Useful Life
|
2017
|
2016
|
||||
Land and improvements
(1)
|
8 - 20 years
(1)
|
$
|
413
|
|
$
|
130
|
|
Buildings, structures and related equipment
|
5 - 40 years
|
3,168
|
|
1,344
|
|
||
Machinery, equipment and other
|
2 - 20 years
|
6,195
|
|
2,916
|
|
||
Total cost
|
|
9,776
|
|
4,390
|
|
||
Less: Accumulated depreciation
|
|
2,817
|
|
2,065
|
|
||
Property, plant and equipment, less accumulated depreciation
|
|
$
|
6,959
|
|
$
|
2,325
|
|
(1)
|
Useful life excludes land.
|
|
Oilfield Services
|
Oilfield Equipment
|
Turbo-machinery & Process Solutions
|
Digital Solutions
|
Total
|
||||||||||
Balance at December 31, 2015, gross
|
$
|
2,885
|
|
$
|
3,840
|
|
$
|
1,853
|
|
$
|
2,043
|
|
$
|
10,621
|
|
Accumulated impairment at December 31, 2015
|
(2,633
|
)
|
(867
|
)
|
—
|
|
(254
|
)
|
(3,754
|
)
|
|||||
Balance at December 31, 2015
|
252
|
|
2,973
|
|
1,853
|
|
1,789
|
|
6,867
|
|
|||||
Acquisitions and purchase accounting adjustments
|
|
19
|
|
(1
|
)
|
|
18
|
|
|||||||
Currency exchange and others
|
(106
|
)
|
(7
|
)
|
(38
|
)
|
(54
|
)
|
(205
|
)
|
|||||
Balance at December 31, 2016
|
146
|
|
2,985
|
|
1,814
|
|
1,735
|
|
6,680
|
|
|||||
Acquisition
(1)
|
13,052
|
|
—
|
|
—
|
|
—
|
|
13,052
|
|
|||||
Currency exchange and others
|
7
|
|
49
|
|
92
|
|
47
|
|
195
|
|
|||||
Balance at December 31, 2017
|
$
|
13,205
|
|
$
|
3,034
|
|
$
|
1,906
|
|
$
|
1,782
|
|
$
|
19,927
|
|
(1)
|
Includes goodwill associated with the acquisition of Baker Hughes. This amount and its allocations to segments are preliminary.
|
|
2017
|
2016
|
||||||||||||||||
|
Gross
Carrying Amount |
Accumulated
Amortization |
Net
|
Gross
Carrying Amount |
Accumulated
Amortization |
Net
|
||||||||||||
Technology
|
$
|
1,177
|
|
$
|
(440
|
)
|
$
|
737
|
|
$
|
596
|
|
$
|
(371
|
)
|
$
|
225
|
|
Customer relationships
|
3,202
|
|
(819
|
)
|
2,383
|
|
1,920
|
|
(660
|
)
|
1,260
|
|
||||||
Capitalized software
|
1,130
|
|
(697
|
)
|
433
|
|
896
|
|
(535
|
)
|
361
|
|
||||||
Trade names and trademarks
|
757
|
|
(159
|
)
|
598
|
|
681
|
|
(130
|
)
|
551
|
|
||||||
Other
|
10
|
|
—
|
|
10
|
|
1
|
|
(1
|
)
|
—
|
|
||||||
Finite-lived intangible assets
|
6,276
|
|
(2,115
|
)
|
4,161
|
|
4,094
|
|
(1,697
|
)
|
2,397
|
|
||||||
Indefinite-lived intangible assets
(1)
|
2,197
|
|
—
|
|
2,197
|
|
52
|
|
—
|
|
52
|
|
||||||
Total intangible assets
|
$
|
8,473
|
|
$
|
(2,115
|
)
|
$
|
6,358
|
|
$
|
4,146
|
|
$
|
(1,697
|
)
|
$
|
2,449
|
|
(1)
|
Indefinite-lived intangible assets principally comprise trade names and trademarks acquired in business combinations.
|
Year
|
Estimated Amortization Expense
|
||
2018
|
$
|
432
|
|
2019
|
398
|
|
|
2020
|
372
|
|
|
2021
|
326
|
|
|
2022
|
293
|
|
|
2017
|
2016
|
||||
Long-term product service agreements
(1)
|
$
|
1,410
|
|
$
|
1,046
|
|
Long-term equipment contract revenue
(2)
|
997
|
|
703
|
|
||
Total revenue in excess of billings
|
2,407
|
|
1,749
|
|
||
Deferred inventory costs
(3)
|
338
|
|
218
|
|
||
Contract assets
|
$
|
2,745
|
|
$
|
1,967
|
|
(1)
|
Reflects revenue earned in excess of billings on our long-term product service agreements.
|
(2)
|
Reflects revenue earned in excess of billings on our long-term contracts to construct technically complex equipment.
|
(3)
|
Represents cost deferral for shipped goods and other costs for which the criteria for revenue recognition has not yet been met.
|
|
2017
|
2016
|
||||||||
|
Amount
|
Weighted average rate
(1)
|
Amount
|
Weighted average rate
(1)
|
||||||
Short-term borrowings
|
|
|
|
|
||||||
Short-term bank borrowings
|
$
|
171
|
|
12.6
|
%
|
$
|
79
|
|
9.1
|
%
|
Current portion of long-term borrowings
|
639
|
|
2.1
|
%
|
34
|
|
1.3
|
%
|
||
Short-term borrowings from GE
|
1,124
|
|
|
|
121
|
|
|
|
||
Other short-term borrowings
|
103
|
|
7.6
|
%
|
5
|
|
1.3
|
%
|
||
Total short-term borrowings
|
2,037
|
|
|
|
239
|
|
|
|||
|
|
|
|
|
||||||
Long-term borrowings
|
|
|
|
|
||||||
3.2% Senior Notes due August 2021
(2)
|
526
|
|
2.5
|
%
|
—
|
|
—
|
|
||
2.773% Senior Notes due December 2022
|
1,244
|
|
2.9
|
%
|
—
|
|
—
|
|
||
8.55% Debentures due June 2024
(2)
|
135
|
|
3.9
|
%
|
—
|
|
—
|
|
||
3.337% Senior Notes due December 2027
|
1,342
|
|
3.4
|
%
|
—
|
|
—
|
|
||
6.875% Notes due January 2029
(2)
|
308
|
|
3.9
|
%
|
—
|
|
—
|
|
||
5.125% Notes due September 2040
(2)
|
1,311
|
|
4.1
|
%
|
—
|
|
—
|
|
||
4.080% Senior Notes due December 2047
|
1,337
|
|
4.1
|
%
|
—
|
|
—
|
|
||
Capital leases
|
87
|
|
7.0
|
%
|
1
|
|
4.5
|
%
|
||
Other long-term borrowings
|
22
|
|
1.9
|
%
|
37
|
|
1.2
|
%
|
||
Total long-term borrowings
|
6,312
|
|
|
38
|
|
|
||||
Total borrowings
|
$
|
8,349
|
|
|
|
$
|
277
|
|
|
|
(1)
|
Weighted average effective interest rate is based on carrying value including step-up adjustment recorded upon the acquisition of Baker Hughes.
|
(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.
|
|
2018
|
2019
|
2020
|
2021
|
2022
|
Thereafter
|
||||||||||||
Total debt
|
$
|
2,037
|
|
$
|
43
|
|
$
|
13
|
|
$
|
540
|
|
$
|
1,255
|
|
$
|
4,461
|
|
|
Pension Benefits
|
Other Postretirement
Benefits
|
||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||
Change in benefit obligation:
|
|
|
|
|
||||||||
Benefit obligation at beginning of year
|
$
|
820
|
|
$
|
1,290
|
|
$
|
117
|
|
$
|
136
|
|
Service cost
|
37
|
|
18
|
|
2
|
|
2
|
|
||||
Interest cost
|
51
|
|
34
|
|
6
|
|
5
|
|
||||
Plan amendment
|
—
|
|
—
|
|
(23
|
)
|
(5
|
)
|
||||
Actuarial loss (gain)
|
41
|
|
39
|
|
—
|
|
(14
|
)
|
||||
Benefits paid
|
(65
|
)
|
(39
|
)
|
(13
|
)
|
(6
|
)
|
||||
Curtailments
|
(45
|
)
|
—
|
|
5
|
|
(1
|
)
|
||||
Settlements
|
(10
|
)
|
—
|
|
—
|
|
—
|
|
||||
Business acquisition
(1)
|
1,546
|
|
—
|
|
93
|
|
—
|
|
||||
Other
(2)
|
(2
|
)
|
(460
|
)
|
—
|
|
—
|
|
||||
Foreign currency translation adjustments
|
45
|
|
(62
|
)
|
—
|
|
—
|
|
||||
Benefit obligation at end of year
|
2,418
|
|
820
|
|
187
|
|
117
|
|
||||
|
|
|
|
|
||||||||
Change in plan assets:
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of year
|
567
|
|
915
|
|
—
|
|
—
|
|
||||
Actual return on plan assets
|
152
|
|
43
|
|
—
|
|
—
|
|
||||
Employer contributions
|
50
|
|
50
|
|
13
|
|
6
|
|
||||
Benefits paid
|
(65
|
)
|
(39
|
)
|
(13
|
)
|
(6
|
)
|
||||
Settlements
|
(10
|
)
|
—
|
|
—
|
|
—
|
|
||||
Business acquisition
(1)
|
1,342
|
|
—
|
|
—
|
|
—
|
|
||||
Other
(2)
|
(2
|
)
|
(358
|
)
|
—
|
|
—
|
|
||||
Foreign currency translation adjustments
|
25
|
|
(44
|
)
|
—
|
|
—
|
|
||||
Fair value of plan assets at end of year
|
2,059
|
|
567
|
|
—
|
|
—
|
|
||||
|
|
|
|
|
||||||||
Funded status - underfunded at end of year
|
$
|
(359
|
)
|
$
|
(253
|
)
|
$
|
(187
|
)
|
$
|
(117
|
)
|
|
|
|
|
|
||||||||
Accumulated benefit obligation
|
$
|
2,373
|
|
$
|
803
|
|
$
|
187
|
|
$
|
117
|
|
(1)
|
Relates to the acquisition of Baker Hughes on July 3, 2017.
|
(2)
|
Two
UK pension plans merged into the GE UK pension plan in 2016.
|
|
Pension Benefits
|
Other Postretirement
Benefits
|
||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||
Noncurrent assets
|
$
|
46
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Current liabilities
|
(10
|
)
|
(4
|
)
|
(24
|
)
|
(6
|
)
|
||||
Noncurrent liabilities
|
(395
|
)
|
(249
|
)
|
(163
|
)
|
(111
|
)
|
||||
Net amount recognized
|
$
|
(359
|
)
|
$
|
(253
|
)
|
$
|
(187
|
)
|
$
|
(117
|
)
|
|
Pension Benefits
|
Other Postretirement
Benefits
|
||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||
Projected benefit obligation
|
$
|
1,692
|
|
$
|
820
|
|
n/a
|
|
n/a
|
|
||
Accumulated benefit obligation
|
$
|
1,647
|
|
$
|
803
|
|
$
|
187
|
|
$
|
117
|
|
Fair value of plan assets
|
$
|
1,286
|
|
$
|
567
|
|
n/a
|
|
n/a
|
|
|
Pension Benefits
|
Other Postretirement
Benefits
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
2017
|
2016
|
2015
|
||||||||||||
Service cost
|
$
|
37
|
|
|
$
|
18
|
|
|
$
|
24
|
|
$
|
2
|
|
$
|
2
|
|
$
|
3
|
|
Interest cost
|
51
|
|
|
34
|
|
|
49
|
|
6
|
|
5
|
|
6
|
|
||||||
Expected return on plan assets
|
(81
|
)
|
|
(46
|
)
|
|
(65
|
)
|
—
|
|
—
|
|
—
|
|
||||||
Amortization of prior service credit
|
—
|
|
|
—
|
|
|
—
|
|
(3
|
)
|
(2
|
)
|
(1
|
)
|
||||||
Amortization of net actuarial loss (gain)
|
12
|
|
|
14
|
|
|
21
|
|
(2
|
)
|
—
|
|
1
|
|
||||||
Curtailment / settlement loss (gain)
|
(45
|
)
|
(2)
|
(26
|
)
|
(1)
|
4
|
|
2
|
|
(2
|
)
|
(11
|
)
|
||||||
Net periodic cost
|
$
|
(26
|
)
|
|
$
|
(6
|
)
|
|
$
|
33
|
|
$
|
5
|
|
$
|
3
|
|
$
|
(2
|
)
|
(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). During the fourth quarter of 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 “Other non-operating income (loss), net” in our consolidated and combined statement of income (loss).
|
|
Pension Benefits
|
Other Postretirement
Benefits
|
||||||
|
2017
|
2016
|
2017
|
2016
|
||||
Discount rate
|
2.99
|
%
|
3.41
|
%
|
3.32
|
%
|
4.00
|
%
|
Rate of compensation increase
|
3.82
|
%
|
4.09
|
%
|
n/a
|
|
n/a
|
|
|
Pension Benefits
|
Other Postretirement
Benefits
|
||||||||||
|
2017
|
2016
|
2015
|
2017
|
2016
|
2015
|
||||||
Discount rate
|
3.24
|
%
|
3.83
|
%
|
3.69
|
%
|
3.72
|
%
|
4.25
|
%
|
4.00
|
%
|
Expected long-term return on plan assets
|
6.26
|
%
|
6.86
|
%
|
6.91
|
%
|
n/a
|
|
n/a
|
|
n/a
|
|
|
One Percentage
Point Increase
|
One Percentage
Point Decrease
|
||||
Effect on total of service and interest cost components (in thousands)
|
$
|
854
|
|
$
|
(685
|
)
|
Effect on postretirement welfare benefit obligation (in thousands)
|
$
|
15,460
|
|
$
|
(12,817
|
)
|
|
Pension Benefits
|
Other Postretirement
Benefits
|
||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||
Net actuarial loss (gain)
|
$
|
117
|
|
$
|
14
|
|
$
|
(16
|
)
|
$
|
(14
|
)
|
Net prior service credit
|
—
|
|
—
|
|
(25
|
)
|
(3
|
)
|
||||
Total
|
$
|
117
|
|
$
|
14
|
|
$
|
(41
|
)
|
$
|
(17
|
)
|
|
2017
|
2016
|
||||
Equity securities
|
|
|
||||
U.S. equity securities
(1)
|
$
|
207
|
|
$
|
122
|
|
Global equity securities
(1)
|
551
|
|
149
|
|
||
Debt securities
|
|
|
||||
Fixed income and cash investment funds
|
658
|
|
49
|
|
||
U.S. corporate
|
70
|
|
53
|
|
||
Other debt securities
|
55
|
|
99
|
|
||
Private equities
|
107
|
|
45
|
|
||
Real estate
|
44
|
|
32
|
|
||
Other investments
(2)
|
367
|
|
18
|
|
||
Total plan assets
|
$
|
2,059
|
|
$
|
567
|
|
(1)
|
Include direct investments and investment funds.
|
(2)
|
Substantially all represented hedge fund and asset allocation fund investments.
|
Year
|
Pension
Benefits
|
Other Postretirement
Benefits
|
||||||||
2018
|
|
$
|
105
|
|
|
|
$
|
24
|
|
|
2019
|
|
109
|
|
|
|
22
|
|
|
||
2020
|
|
107
|
|
|
|
17
|
|
|
||
2021
|
|
111
|
|
|
|
12
|
|
|
||
2022
|
|
112
|
|
|
|
10
|
|
|
||
2023-2027
|
|
593
|
|
|
|
47
|
|
|
|
2017
|
2016
|
2015
|
||||||
Current:
|
|
|
|
||||||
U.S.
|
$
|
(33
|
)
|
$
|
(114
|
)
|
$
|
158
|
|
Foreign
|
408
|
|
325
|
|
411
|
|
|||
Total current
|
375
|
|
211
|
|
569
|
|
|||
Deferred:
|
|
|
|
||||||
U.S.
|
(257
|
)
|
13
|
|
(21
|
)
|
|||
Foreign
|
(47
|
)
|
26
|
|
(75
|
)
|
|||
Total deferred
|
(304
|
)
|
39
|
|
(96
|
)
|
|||
Provision for income taxes
|
$
|
71
|
|
$
|
250
|
|
$
|
473
|
|
|
2017
|
2016
|
2015
|
||||||
U.S.
|
$
|
(1,153
|
)
|
$
|
(440
|
)
|
$
|
(2,006
|
)
|
Foreign
|
982
|
|
1,024
|
|
1,848
|
|
|||
Income (loss) before income taxes, inclusive of equity in loss of affiliate
|
$
|
(171
|
)
|
$
|
584
|
|
$
|
(158
|
)
|
|
2017
|
2016
|
2015
|
||||||
Income (loss) before income taxes, inclusive of equity in loss of affiliate
|
$
|
(171
|
)
|
$
|
584
|
|
$
|
(158
|
)
|
Taxes at the U.S. federal statutory income tax rate
|
(60
|
)
|
205
|
|
(55
|
)
|
|||
Effect of foreign operations
|
(50
|
)
|
(5
|
)
|
(137
|
)
|
|||
Tax impact of partnership structure
|
167
|
|
—
|
|
—
|
|
|||
Tax impact of dispositions
|
—
|
|
1
|
|
(26
|
)
|
|||
Nondeductible goodwill
|
—
|
|
—
|
|
713
|
|
|||
Change in valuation allowances
|
169
|
|
28
|
|
9
|
|
|||
Tax Cuts and Jobs Act enactment
|
(132
|
)
|
—
|
|
—
|
|
|||
Other - net
|
(23
|
)
|
21
|
|
(31
|
)
|
|||
Provision for income taxes
|
$
|
71
|
|
$
|
250
|
|
$
|
473
|
|
Actual income tax rate
|
(41.5
|
)%
|
42.8
|
%
|
(299.4
|
)%
|
|
2017
|
2016
|
||||
Deferred tax assets:
|
|
|
||||
Receivables
|
$
|
98
|
|
$
|
—
|
|
Inventory
|
41
|
|
71
|
|
||
Property
|
144
|
|
—
|
|
||
Employee benefits
|
64
|
|
154
|
|
||
Investment in partnership
|
74
|
|
—
|
|
||
Other accrued expenses
|
91
|
|
121
|
|
||
Operating loss carryforwards
|
1,376
|
|
142
|
|
||
Tax credit carryforwards
|
554
|
|
5
|
|
||
Other
|
243
|
|
—
|
|
||
Total deferred income tax asset
|
2,685
|
|
493
|
|
||
Valuation allowances
|
(2,474
|
)
|
(87
|
)
|
||
Total deferred income tax asset after valuation allowance
|
211
|
|
406
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||
Goodwill and other intangibles
|
(202
|
)
|
(845
|
)
|
||
Property
|
—
|
|
(62
|
)
|
||
Undistributed earnings of foreign subsidiaries
|
—
|
|
(46
|
)
|
||
Other
|
(51
|
)
|
(9
|
)
|
||
Total deferred income tax liability
|
(253
|
)
|
(962
|
)
|
||
Net deferred tax liability
|
$
|
(42
|
)
|
$
|
(556
|
)
|
Asset / (Liability)
|
2017
|
2016
|
||||
Balance at January 1
|
$
|
(94
|
)
|
$
|
(100
|
)
|
Balance acquired from Baker Hughes
|
(326
|
)
|
—
|
|
||
Additions for tax positions of the current year
|
(13
|
)
|
(4
|
)
|
||
Additions for tax positions of prior years
|
(19
|
)
|
—
|
|
||
Reductions for tax positions of prior years
|
32
|
|
5
|
|
||
Settlements with tax authorities
|
14
|
|
—
|
|
||
Lapse of statute of limitations
|
11
|
|
5
|
|
||
Balance at December 31
|
$
|
(395
|
)
|
$
|
(94
|
)
|
|
2017
|
||
Expected life (years)
|
6
|
|
|
Risk-free interest rate
|
2.1
|
%
|
|
Volatility
|
36.4
|
%
|
|
Dividend yield
|
1.2
|
%
|
|
Weighted average fair value per share at grant date
|
$
|
12.32
|
|
|
Number of
Options |
Weighted Average
Exercise Price Per Option (1) |
|||
Conversion of Baker Hughes stock options outstanding on July 3, 2017
|
6,822
|
|
$
|
36.17
|
|
Granted
|
1,626
|
|
36.62
|
|
|
Exercised
|
(261
|
)
|
25.66
|
|
|
Forfeited
|
(28
|
)
|
36.89
|
|
|
Expired
|
(318
|
)
|
61.21
|
|
|
Outstanding at December 31, 2017
|
7,841
|
|
$
|
35.59
|
|
Exercisable at December 31, 2017
|
6,243
|
|
$
|
35.33
|
|
(1)
|
Weighted average exercise price for the converted stock options reflect a reduction of
$17.50
for the special dividend.
|
|
Number of
Units |
Weighted Average
Grant Date Fair Value Per Unit |
|||
Conversion of Baker Hughes RSUs outstanding on July 3, 2017
|
1,720
|
|
$
|
40.18
|
|
Granted
|
2,121
|
|
36.73
|
|
|
Vested
|
(471
|
)
|
40.18
|
|
|
Forfeited
|
(84
|
)
|
38.09
|
|
|
Unvested balance at December 31, 2017
|
3,286
|
|
$
|
38.01
|
|
|
Class A Common Stock
|
Class B Common Stock
|
||
Balance at December 31, 2016
|
—
|
|
—
|
|
Issue of shares on business combination at July 3, 2017
|
427,709
|
|
717,111
|
|
Issue of shares upon vesting of restricted stock units
(1)
|
290
|
|
—
|
|
Issue of shares on exercises of stock options
(1)
|
256
|
|
—
|
|
Stock repurchase program
(2) (3)
|
(6,047
|
)
|
(10,126
|
)
|
Balance at December 31, 2017
|
422,208
|
|
706,985
|
|
(1)
|
Share amounts reflected above are net of shares withheld to satisfy the employee's tax withholding obligation.
|
(2)
|
On November 2, 2017, our board of directors authorized BHGE LLC to repurchase up to
$3 billion
of its common units from the Company and GE. The proceeds of this repurchase are to be used by BHGE to repurchase Class A common stock of the Company on the open market, which if fully implemented would result in the repurchase of approximately
$1.1 billion
of Class A common stock. The Class B common stock of the Company, that is paired with repurchased common units, was repurchased by the Company at par value. The
$3 billion
repurchase authorization is the aggregate authorization for repurchases of Class A and Class B common stock together with its paired unit. BHGE LLC had authorization remaining to repurchase up to approximately
$2.5 billion
of its common units from BHGE and GE at December 31, 2017.
|
(3)
|
During 2017, we repurchased and canceled
6,046,735
shares of Class A common stock for a total of
$187 million
. We also repurchased and canceled
10,126,467
shares of Class B common stock from GE which is paired together with common units of BHGE LLC for
$314 million
.
|
|
Investment Securities
|
Foreign Currency Translation Adjustments
|
Cash Flow Hedges
|
Benefit Plans
|
Accumulated Other Comprehensive Loss
|
||||||||||
Balance at December 31, 2015
|
$
|
—
|
|
$
|
(1,384
|
)
|
$
|
(2
|
)
|
$
|
(146
|
)
|
$
|
(1,532
|
)
|
Other comprehensive loss before reclassifications
|
—
|
|
(423
|
)
|
(38
|
)
|
(12
|
)
|
(473
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
1
|
|
37
|
|
88
|
|
126
|
|
|||||
Deferred taxes
|
—
|
|
|
(7
|
)
|
(22
|
)
|
(29
|
)
|
||||||
Other comprehensive income (loss)
|
—
|
|
(422
|
)
|
(8
|
)
|
54
|
|
(376
|
)
|
|||||
Less: Other comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
(5
|
)
|
—
|
|
(9
|
)
|
(14
|
)
|
|||||
Balance at December 31, 2016
|
—
|
|
(1,801
|
)
|
(10
|
)
|
(83
|
)
|
(1,894
|
)
|
|||||
Other comprehensive income before reclassifications
|
41
|
|
7
|
|
8
|
|
45
|
|
101
|
|
|||||
Amounts reclassified from accumulated other comprehensive loss
|
(39
|
)
|
—
|
|
7
|
|
1
|
|
(31
|
)
|
|||||
Deferred taxes
|
2
|
|
(10
|
)
|
(3
|
)
|
9
|
|
(2
|
)
|
|||||
Other comprehensive income (loss)
|
4
|
|
(3
|
)
|
12
|
|
55
|
|
68
|
|
|||||
Less: Other comprehensive income attributable to noncontrolling interests
|
3
|
|
41
|
|
2
|
|
37
|
|
83
|
|
|||||
Less: Other adjustments
|
—
|
|
—
|
|
—
|
|
13
|
|
13
|
|
|||||
Less: Reallocation of AOCL based on ownership of GE and previous Baker Hughes stockholders
|
—
|
|
(1,170
|
)
|
(1
|
)
|
(63
|
)
|
(1,234
|
)
|
|||||
Less: Activity related to noncontrolling interest
|
—
|
|
5
|
|
—
|
|
8
|
|
13
|
|
|||||
Balance at December 31, 2017
|
$
|
1
|
|
$
|
(680
|
)
|
$
|
1
|
|
$
|
(23
|
)
|
$
|
(701
|
)
|
|
2017
|
2016
|
||||
GE's interest in BHGE LLC
|
$
|
24,324
|
|
$
|
—
|
|
Other noncontrolling interests
|
140
|
|
167
|
|
||
Total noncontrolling interests
|
$
|
24,464
|
|
$
|
167
|
|
(In millions, except per share amounts)
|
2017
|
2016
|
2015
|
||||||
Net income (loss)
|
$
|
(242
|
)
|
$
|
334
|
|
$
|
(631
|
)
|
Less: Net income (loss) attributable to GE O&G pre-merger
|
109
|
|
403
|
|
(606
|
)
|
|||
Less: Net loss attributable to noncontrolling interests
|
(278
|
)
|
(69
|
)
|
(25
|
)
|
|||
Net loss attributable to BHGE
|
$
|
(73
|
)
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
||||||
Weighted average shares outstanding:
|
|
|
|
||||||
Class A basic & diluted
|
427
|
|
|
|
|||||
Net loss per share attributable to common stockholders:
|
|
|
|
||||||
Class A basic & diluted
|
$
|
(0.17
|
)
|
|
|
|
2017
|
2016
|
||||||||||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Net Balance
|
Level 1
|
Level 2
|
Level 3
|
Net Balance
|
||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Derivatives
|
$
|
—
|
|
$
|
150
|
|
$
|
—
|
|
$
|
150
|
|
$
|
—
|
|
$
|
318
|
|
$
|
—
|
|
$
|
318
|
|
Investment securities
|
81
|
|
8
|
|
304
|
|
393
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Total assets
|
81
|
|
158
|
|
304
|
|
543
|
|
—
|
|
318
|
|
—
|
|
318
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Derivatives
|
—
|
|
(95
|
)
|
—
|
|
(95
|
)
|
—
|
|
(375
|
)
|
—
|
|
(375
|
)
|
||||||||
Total liabilities
|
$
|
—
|
|
$
|
(95
|
)
|
$
|
—
|
|
$
|
(95
|
)
|
$
|
—
|
|
$
|
(375
|
)
|
$
|
—
|
|
$
|
(375
|
)
|
Balance at December 31, 2016
|
$
|
—
|
|
Additions as a result of business combination
|
179
|
|
|
Purchases
|
186
|
|
|
Proceeds at maturity
|
(62
|
)
|
|
Unrealized gains recognized in accumulated other comprehensive income (loss)
|
1
|
|
|
Balance at December 31, 2017
|
$
|
304
|
|
|
2017
|
2016
|
||||||||||||||||||||||
|
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
|
$
|
310
|
|
$
|
2
|
|
$
|
—
|
|
$
|
312
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Equity securities
|
81
|
|
—
|
|
—
|
|
81
|
|
1
|
|
—
|
|
—
|
|
1
|
|
||||||||
Total
|
$
|
391
|
|
$
|
2
|
|
$
|
—
|
|
$
|
393
|
|
$
|
1
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1
|
|
|
2017
|
2016
|
||||||||||
|
Assets
|
(Liabilities)
|
Assets
|
(Liabilities)
|
||||||||
Derivatives accounted for as hedges
|
|
|
|
|
||||||||
Currency exchange contracts
|
$
|
6
|
|
$
|
—
|
|
$
|
2
|
|
$
|
(9
|
)
|
|
|
|
|
|
||||||||
Derivatives not accounted for as hedges
|
|
|
|
|
||||||||
Currency exchange contracts
|
144
|
|
(95
|
)
|
316
|
|
(366
|
)
|
||||
Total derivatives
|
$
|
150
|
|
$
|
(95
|
)
|
$
|
318
|
|
$
|
(375
|
)
|
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
|
|
2017
|
2016
|
||||||||||
|
Cash flow hedges
|
Economic hedges
|
Cash flow hedges
|
Economic hedges
|
||||||||
Effect on hedging instrument
|
$
|
8
|
|
$
|
121
|
|
$
|
38
|
|
$
|
(272
|
)
|
Effect on underlying
|
(8
|
)
|
(152
|
)
|
(38
|
)
|
102
|
|
||||
Effect on earnings
(1)
|
—
|
|
(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
|
||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||
Currency exchange contracts
|
$
|
8
|
|
$
|
(38
|
)
|
$
|
(7
|
)
|
$
|
(37
|
)
|
Segment revenue
|
2017
|
2016
|
2015
|
||||||
Oilfield Services
|
$
|
5,851
|
|
$
|
799
|
|
$
|
1,411
|
|
Oilfield Equipment
|
2,637
|
|
3,547
|
|
5,060
|
|
|||
Turbomachinery & Process Solutions
|
6,463
|
|
6,837
|
|
7,985
|
|
|||
Digital Solutions
|
2,309
|
|
2,086
|
|
2,232
|
|
|||
Total
|
$
|
17,259
|
|
$
|
13,269
|
|
$
|
16,688
|
|
Segment income (loss) before income taxes
|
2017
|
2016
|
2015
|
||||||
Oilfield Services
|
$
|
71
|
|
$
|
(204
|
)
|
$
|
(79
|
)
|
Oilfield Equipment
|
38
|
|
320
|
|
677
|
|
|||
Turbomachinery & Process Solutions
|
853
|
|
1,255
|
|
1,684
|
|
|||
Digital Solutions
|
333
|
|
355
|
|
409
|
|
|||
Total segment
|
1,295
|
|
1,726
|
|
2,691
|
|
|||
Corporate
|
(373
|
)
|
(380
|
)
|
(260
|
)
|
|||
Inventory impairment and related charges
(1)
|
(244
|
)
|
(138
|
)
|
(51
|
)
|
|||
Restructuring, impairment and other
|
(412
|
)
|
(516
|
)
|
(411
|
)
|
|||
Goodwill impairment
|
—
|
|
—
|
|
(2,080
|
)
|
|||
Merger and related costs
|
(373
|
)
|
(33
|
)
|
(27
|
)
|
|||
Other non operating income (loss), net
|
78
|
|
27
|
|
100
|
|
|||
Interest expense, net
|
(131
|
)
|
(102
|
)
|
(120
|
)
|
|||
Total
|
$
|
(160
|
)
|
$
|
584
|
|
$
|
(158
|
)
|
(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.
|
Segments assets
|
2017
|
2016
|
||||
Oilfield Services
(1)
|
$
|
32,761
|
|
$
|
4,046
|
|
Oilfield Equipment
|
7,682
|
|
8,744
|
|
||
Turbomachinery & Process Solutions
|
9,712
|
|
8,565
|
|
||
Digital Solutions
|
3,831
|
|
3,113
|
|
||
Total segment
|
53,986
|
|
24,468
|
|
||
Corporate and eliminations
(2)
|
3,064
|
|
(2,747
|
)
|
||
Total
|
$
|
57,050
|
|
$
|
21,721
|
|
(1)
|
Goodwill acquired as a result of the Baker Hughes acquisition has been preliminarily allocated to Oilfield Services. See "Note 6. Goodwill and Other Intangible Assets" for further details.
|
(2)
|
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
|
2017
|
2016
|
2015
|
||||||
Oilfield Services
|
$
|
613
|
|
$
|
132
|
|
$
|
164
|
|
Oilfield Equipment
|
187
|
|
154
|
|
178
|
|
|||
Turbomachinery & Process Solutions
|
174
|
|
186
|
|
138
|
|
|||
Digital Solutions
|
119
|
|
78
|
|
50
|
|
|||
Total Segment
|
1,093
|
|
550
|
|
530
|
|
|||
Corporate
|
10
|
|
—
|
|
—
|
|
|||
Total
|
$
|
1,103
|
|
$
|
550
|
|
$
|
530
|
|
Revenue
|
2017
|
2016
|
2015
|
||||||
U.S.
|
$
|
4,350
|
|
$
|
3,164
|
|
$
|
4,334
|
|
Non-U.S.
|
12,909
|
|
10,105
|
|
12,354
|
|
|||
Total
|
$
|
17,259
|
|
$
|
13,269
|
|
$
|
16,688
|
|
Property, plant and equipment - net
|
2017
|
2016
|
2015
|
||||||
U.S.
|
$
|
4,054
|
|
$
|
833
|
|
$
|
954
|
|
Non-U.S.
|
2,905
|
|
1,492
|
|
1,600
|
|
|||
Total
|
$
|
6,959
|
|
$
|
2,325
|
|
$
|
2,554
|
|
|
2017
|
2016
|
2015
|
||||||
Oilfield Services
|
$
|
187
|
|
$
|
122
|
|
$
|
183
|
|
Oilfield Equipment
|
114
|
|
52
|
|
32
|
|
|||
Turbomachinery & Process Solutions
|
21
|
|
58
|
|
54
|
|
|||
Digital Solutions
|
34
|
|
34
|
|
26
|
|
|||
Corporate
|
29
|
|
27
|
|
19
|
|
|||
Total
|
$
|
385
|
|
$
|
293
|
|
$
|
314
|
|
|
2017
|
2016
|
2015
|
||||||
Property, plant & equipment, net
|
$
|
131
|
|
$
|
93
|
|
$
|
137
|
|
Employee-related termination expenses
|
186
|
|
111
|
|
103
|
|
|||
Asset relocation costs
|
10
|
|
17
|
|
14
|
|
|||
EHS remediation costs
|
9
|
|
20
|
|
17
|
|
|||
Contract termination fees
|
26
|
|
37
|
|
26
|
|
|||
Other incremental costs
|
23
|
|
15
|
|
17
|
|
|||
Total
|
$
|
385
|
|
$
|
293
|
|
$
|
314
|
|
Balance at December 31, 2016, and 2015, respectively
|
$
|
74
|
|
$
|
100
|
|
Provisions
|
37
|
|
29
|
|
||
Expenditures
|
(44
|
)
|
(49
|
)
|
||
Other
(1)
|
97
|
|
(6
|
)
|
||
Balance at December 31, 2017, and 2016, respectively
|
$
|
164
|
|
$
|
74
|
|
(1)
|
Includes an increase of
$93 million
in the year ended
December 31, 2017
as a result of the Baker Hughes acquisition.
|
(In millions, except per share amounts)
|
First
Quarter
|
Second
Quarter
|
Third Quarter
|
Fourth Quarter
|
Total
Year
|
||||||||||
2017
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
3,111
|
|
$
|
3,010
|
|
$
|
5,375
|
|
$
|
5,763
|
|
$
|
17,259
|
|
Gross profit
(1)
|
775
|
|
542
|
|
1,020
|
|
875
|
|
3,213
|
|
|||||
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
|
—
|
|
—
|
|
(104
|
)
|
30
|
|
(73
|
)
|
|||||
Basic earnings (loss) per Class A common share
|
|
|
|
|
(0.24
|
)
|
0.07
|
|
(0.17
|
)
|
|||||
Diluted earnings (loss) per Class A common share
|
|
|
(0.24
|
)
|
0.07
|
|
(0.17
|
)
|
|||||||
Cash dividend per Class A common share
|
|
|
|
|
0.17
|
|
0.18
|
|
0.35
|
|
|||||
Common stock market prices:
|
|
|
|
|
|
||||||||||
High
|
|
|
37.91
|
|
36.86
|
|
|
||||||||
Low
|
|
|
|
|
32.54
|
|
29.73
|
|
|
||||||
|
|
|
|
|
|
||||||||||
2016
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
3,407
|
|
$
|
3,322
|
|
$
|
3,024
|
|
$
|
3,516
|
|
$
|
13,269
|
|
Gross profit
(1)
|
798
|
|
785
|
|
730
|
|
833
|
|
3,146
|
|
|||||
Restructuring, impairment and other
(2)
|
147
|
|
228
|
|
77
|
|
64
|
|
516
|
|
|||||
Merger and related costs
|
5
|
|
3
|
|
2
|
|
23
|
|
33
|
|
|||||
Net income (loss) attributable to Baker Hughes, a GE company
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(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 2017 and 2016. See "Note 18. Restructuring, Impairment and Other" for further discussion.
|
Equity Compensation Plan
Category
|
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
|
|
Weighted Average
Exercise Price of
Outstanding
Options, Warrants
and Rights
|
|
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(excluding securities
reflected in the first
column)
|
||||||||||
Stockholder-approved plans
|
|
1.6
|
|
|
|
|
$
|
36.61
|
|
|
|
|
53.7
|
|
|
Nonstockholder-approved plans
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Total
|
|
1.6
|
|
|
|
|
$
|
36.61
|
|
|
|
|
53.7
|
|
|
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
|
|
|
|
|
Date:
|
February 23, 2018
|
|
/s/ LORENZO SIMONELLI
|
|
|
|
Lorenzo Simonelli
Chairman, President and Chief Executive Officer
|
Signature
|
|
Title
|
|
|
|
/s/ LORENZO SIMONELLI
|
|
Chairman, 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)
|
/s/ W. GEOFFREY BEATTIE
|
|
Lead Director
|
(W. Geoffrey Beattie)
|
|
|
|
|
|
/s/ GREGORY D. BRENNEMAN
|
|
Director
|
(Gregory D. Brenneman)
|
|
|
|
|
|
/s/ CLARENCE P. CAZALOT, JR.
|
|
Director
|
(Clarence P. Cazalot, Jr.)
|
|
|
|
|
|
/s/ MARTIN S. CRAIGHEAD
|
|
Vice Chairman of the Board
|
(Martin S. Craighead)
|
|
|
|
|
|
/s/ LYNN L. ELSENHANS
|
|
Director
|
(Lynn L. Elsenhans)
|
|
|
|
|
|
/s/ JAMIE S. MILLER
|
|
Director
|
(Jamie S. Miller)
|
|
|
|
|
|
/s/ JAMES J. MULVA
|
|
Director
|
(James J. Mulva)
|
|
|
|
|
|
/s/ JOHN G. RICE
|
|
Director
|
(John G. Rice)
|
|
|
|
|
|
4.
|
Method of Exercise
.
|
Relative Absolute Change
ROIC / Relative Cumulative Average ROIC (Percentile v. Peers) |
Performance
Condition Attainment for Relative Absolute Change ROIC / Relative Cumulative Average ROIC |
Total Performance Condition Attainment (Average of Relative Absolute Change
ROIC Attainment and Relative Cumulative Average ROIC Attainment) |
≥
75
|
150%
|
150%
|
50
|
100%
|
100%
|
25
|
50%
|
50%
|
0 – 24.9
|
0%
|
0%
|
•
|
Your separation from service;
|
•
|
Your terms of continued employment pending your separation from service;
|
•
|
Certain benefits the Company has agreed to provide to you upon the termination of your employment;
|
•
|
Your agreement to certain obligations of confidentiality, non-competition, non-solicitation and cooperation; and
|
•
|
The mutual release of any and all claims by you and the Company.
|
1.
|
Consideration
. In consideration for your signing and delivering this Agreement, the Company agrees to pay you those benefits under the letter agreement between you and Baker Hughes, a GE company dated effective as of January 2, 2018 (the “Letter Agreement”) to which you would not have been entitled absent the Letter Agreement, the cash separation payment, the accelerated vesting of restricted stock units and the excise tax gross-up payments (collectively, the
“
Severance Benefits”), less applicable voluntary and statutory withholdings, on the payment dates specified in the Letter Agreement. You will receive payment of the Severance Benefits in accordance with the Letter Agreement, and subject to the conditions stated there and elsewhere in this Agreement.
|
2.
|
General Release.
In exchange for the benefits described in paragraph 1, you are waiving and releasing all known or unknown claims and causes of action you have or may have, as of the day you sign this Agreement, against the Company arising out of your employment, including your separation from employment. The claims you are releasing include, but are not limited to:
|
3.
|
Exclusions from General Release.
Excluded from the General Release above are any claims or rights (i) that may arise after the date that you sign this Agreement, (ii) for breach of this Agreement, (iii) for reimbursement of business expenses incurred on behalf of the Company under the Company’s expense reimbursement policies, (iv) for vested rights under any Company ERISA-covered employee benefit plans applicable to you on the date you sign this General Release, (v) any claims that controlling law clearly states may not be released by private settlement, including but not limited to claims for Worker’s Compensation benefits for job-related illness or injury or for unemployment insurance, or (vi) to challenge the validity of this General Release under the OWBPA.
|
3.1
|
No Interference with Rights.
Also excluded from the General Release is your right to file a charge with an administrative agency or participate in any agency investigation or proceeding conducted by the Equal Employment Opportunity Commission (
“
EEOC”), the National Labor Relations Board (
“
NLRB”), the U.S. Department of Labor (
“
DOL”), the Securities and Exchange Commission (
“
SEC”), Occupational Safety and Health Administration (
“
OSHA”), or any other federal, state or local agency charged with the enforcement of any laws including providing documents or other information, or from testifying truthfully in the course of any administrative, legal or arbitration proceeding. Subject to paragraph 4, you are, however, waiving your right to any recover money in connection with such a charge or investigation. You are also waiving your right to recover money in connection with a charge filed by any other individual or by the EEOC or any other federal or
|
4.
|
Whistleblower Protection.
Nothing in this Agreement limits your ability to communicate directly with and provide information, including documents, not otherwise protected from disclosure by any applicable law or privilege to the SEC or any other federal, state or local governmental agency or commission (
“
Government Agency”) regarding possible legal violations, without disclosure to the Company. The Company may not retaliate against you for any of these activities, and nothing in this Agreement requires you to waive any monetary award or other payment that you might become entitled to and to be paid by the SEC or any other Government Agency.
|
5.
|
Covenant Not To Sue.
A
“
covenant not to sue” is a legal term which means you promise not to file a lawsuit in court. It is different from the General Release of claims contained in paragraph 2 above. Besides waiving and releasing the claims covered by paragraph 2 above, you further agree never to sue the Company in any forum for any reason, including but not limited to claims, laws or theories covered by the General Release language in paragraph 2 above. Notwithstanding this Covenant Not To Sue, you may bring a claim against the Company as set forth in paragraphs 3 and 4 above. If you sue the Company in violation of this Agreement, you shall be liable to the Company for its reasonable attorneys’ fees and other litigation costs incurred in defending against such a suit. As indicated above, it would not violate any part of this Agreement to bring a legal claim against the Company to enforce this Agreement, or to challenge the validity of this Agreement under the ADEA. However, pursuant to paragraph 18 of this Agreement, any claim brought by you against the Company to enforce this Agreement or to challenge the validity of this Agreement under the ADEA must be brought in arbitration, not in a court.
|
6.
|
Restrictive Covenants.
You hereby affirm that you remain subject to the covenants set forth in in the Employee Confidentiality and Innovation Agreement between you and the Company dated June 2, 2017 in accordance with the terms thereof.
|
6.1
|
Defend Trade Secrets Act Notice
. You acknowledge that you have received notice that under the 2016 Defend Trade Secrets Act (DTSA): (1) no individual will be held criminally or civilly liable under Federal or State trade secret law for the disclosure of a trade secret (as defined in the Economic Espionage Act) that: (A) is made in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and made solely for the purpose of reporting or investigating a suspected violation of law; or, (B) is made in a complaint or other
|
7.
|
Property.
You will return to the Company all Company property in your possession, including but not limited to, PDAs, mobile phones, computers, laptops, external hard drives, flash and jump drives, credit cards and all files, documents and records of the Company, in whatever medium and of whatever kind or type. This includes but is not limited to customer lists, pricing information, training materials, planning information and salary information. You agree and hereby certify that you have returned, or will return all proprietary or confidential information or documents relating to the business and affairs of the Company and its affiliates. You further agree that should it subsequently be determined by the Company that, notwithstanding the foregoing certification, you have inadvertently failed to return all proprietary or confidential information and documents in your possession or control relating to the business and affairs of the Company and its affiliates, you will be obligated to promptly return to the Company such proprietary or confidential information and documents in your possession or control relating to the business and affairs of the Company and its affiliates.
|
8.
|
Cooperation and Assistance.
Except as otherwise provided by paragraphs 3.1, 4 and 6.1 you agree to make yourself reasonably available to the Company to respond to requests by the Company for information pertaining to or relating to the Company, and its affiliates, subsidiaries, agents, officers, directors, fiduciaries, or employees, which may be within your knowledge. You agree to cooperate fully with the Company in connection with any and all existing or future litigations or investigations brought by or against the Company or any of its past or present affiliates, agents, officers, directors, fiduciaries, or employees, whether administrative, civil or criminal in nature, in which, and to the extent the Company deems your cooperation necessary. The Company will reimburse you for reasonable out-of-pocket expenses incurred as a result of such cooperation.
|
9.
|
Non-Admissions.
The fact and terms of this Agreement are not an admission by the Company of liability or other wrongdoing under any federal, state or local law.
|
10.
|
Additional Employee Acknowledgments.
You also acknowledge that:
|
11.
|
Non-Disparagement.
Except as otherwise provided in paragraphs 3.1, 4 and 6.1 you agree, subject to any obligations you may have under applicable law, that you will not make or cause to be made any statements or take any actions that disparage or in any way damage the reputation of the Company. In the event such a communication is made to anyone, including but not limited to the media, public interest groups and publishing companies, it will be considered a material breach of the terms of this Agreement. You understand that nothing in this paragraph prevents you from disclosing statements, of any nature, regarding possible violations of law or regulation to government agencies or authorities.
|
12.
|
Breach by Employee
. You agree that your obligations contained in paragraphs 5, 6, 8 and 11 of this Agreement and Article 2 of the Executive Agreement are reasonable and necessary for the protection of the Company’s legitimate business interests, and that you fully understand and freely enter into these obligations. Except as otherwise provided in paragraphs 3.1, 4 and 6.1 the Company’s obligations to you after the Effective Date are contingent on you fulfilling your obligations under this Agreement. If you commit any
|
13.
|
Revocation.
After you sign this Agreement, you will have 7 days to revoke it. This Agreement shall not be effective or enforceable until the revocation period has expired. If you want to revoke this Agreement you should deliver a written revocation by letter addressed to the Chief Legal Officer, Baker Hughes, a GE company, 17021 Aldine Westfield Road, Houston, Texas 77073, within 7 days after you signed it.
|
14.
|
Governing Law.
This Agreement shall be construed and interpreted in accordance with the laws of the State of Texas, exclusive of its choice of law provisions.
|
15.
|
Subsequent Use of this Agreement
. Additionally, the parties agree that this Agreement may be used as evidence in a proceeding in which you or the Company allege a breach of this Agreement, or to assert a complete or partial defense to any lawsuit, arbitration or claim, and may be used as a basis for an injunction against any action, suit or other proceeding that may be prosecuted, instituted or attempted by you in breach of you release of claims. Other than this exception, or disclosure to the EEOC, NLRB, SEC, OSHA, or any other federal, state or local agency charged with the enforcement of any laws, as provided in paragraphs 3.1, 4 and 6.1 above, you and the Company agree that neither will offer or introduce this Agreement as evidence in any administrative proceeding, arbitration or lawsuit.
|
16.
|
Arbitration Agreement.
Save to the extent that this Agreement expressly provides for the resolution of any category of dispute, controversy, or claim in some other manner, the Parties hereby agree that any dispute, controversy, or claim arising out of, relating to, or in connection with this Agreement shall, whether or not this Agreement has been terminated, be referred to and finally determined by mediation and arbitration in accordance with the provisions of the Mediation and Arbitration Agreement between you and the Company or its affiliate dated June 2, 2017.
|
17.
|
Compliance With Section 409A.
This Agreement is intended to comply with Section 409A of the Internal Revenue Code (
“
Section 409A”) or an exemption thereunder. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A, and in no event
|
18.
|
Exclusive Rights and Benefits.
Except as otherwise provided in this Agreement, the benefits described in this Agreement, supersede, negate and replace any other benefits owed to or offered by the Company to you. This Agreement will be administered by the Company’s Senior Labor & Employment Counsel and Chief Human Resources Officer, who will also resolve any issues regarding the interpretation, implementation, or administration of the benefits described above. However, this provision shall not be construed to limit your legal rights if a disagreement exists to contest the decision of the Company’s Senior Labor & Employment Counsel.
|
19.
|
Severability and Headings.
The invalidity or unenforceability of a term or provision of this Agreement shall not affect the validity or enforceability of any other term or provision of this Agreement, which shall remain in full force and effect. Any titles or headings in this Agreement are for convenience only and shall have no bearing on any interpretation of this Agreement.
|
20.
|
Questions related to your termination and/or severance should be directed to the Chief Legal Officer, Baker Hughes, a GE company.
|
Subsidiary
|
Jurisdiction
|
Percentage Ownership
|
EHHC NewCo LLC
|
Delaware
|
100%
|
CFC Holdings LLC
|
Delaware
|
100%
|
Baker Hughes, a GE company, LLC
|
Delaware
|
Note (1) *
|
GE Oil & Gas International S.à r.l.
|
Luxembourg
|
100%
|
GE Oil & Gas Panafriana Holdings II B.V.
|
Netherlands
|
100%
|
GE Energy Europe B.V.
|
Netherlands
|
100%
|
Nuovo Pignone Holdings S.p.a.
|
Italy
|
Note (2)
|
Nuovo Pignone International S.r.l.
|
Italy
|
100%
|
Baker Hughes International Branches LLC
|
Delaware
|
100%
|
Western Atlas Holdings LLC
|
Delaware
|
100%
|
Baker Hughes EHHC LLC
|
Delaware
|
100%
|
US SCS Partner LLC
|
Delaware
|
100%
|
Baker Hughes International Partners Holdings SCS
|
Luxembourg
|
Note (3)
|
Baker Hughes International Financing S.à r.l.
|
Luxembourg
|
100%
|
Baker Hughes International Partners S.à r.l.
|
Luxembourg
|
100%
|
Baker Hughes International Holdings, S.à r.l.
|
Luxembourg
|
Note (4)
|
BJS Holdings 2 S.à r.l.
|
Luxembourg
|
100%
|
Baker Hughes Holdings 4 S.à r.l.
|
Luxembourg
|
100%
|
Baker Hughes Holdings II B.V.
|
Netherlands
|
100%
|
Baker Hughes Holdings 3 S.à r.l.
|
Luxembourg
|
100%
|
Baker Hughes Holdings 5 S.à r.l.
|
Luxembourg
|
100%
|
Baker Hughes International Coöperatief U.A.
|
Netherlands
|
100%
|
Baker Hughes Holdings I B.V.
|
Netherlands
|
100%
|
Baker Hughes Luxembourg Holdings S.C.A.
|
Luxembourg
|
Note (5)
|
BJ Services International S.à r.l.
|
Luxembourg
|
100%
|
Baker Hughes Nederland Holdings B.V.
|
Netherlands
|
100%
|
Baker Hughes International S.R.L.
|
Romania
|
100%
|
(1)
|
Baker Hughes, a GE company, LLC
|
|
|
|
*EHHC NewCo LLC - the Managing Partner
|
|
33.86735%
|
|
CFC Holdings
|
|
3.52291%
|
|
Other subsidiaries of General Electric Company
|
|
62.60973%
|
(2)
|
Nuovo Pignone Holdings S.p.a.
|
|
|
|
GE Energy Europe B.V.
|
|
64.9833%
|
|
Other subsidiaries of Baker Hughes, a GE company, LLC
|
|
35.0000%
|
|
Unrelated Foreign Entity
|
|
0.0167%
|
(3)
|
Baker Hughes International Partners Holdings SCS
|
|
|
|
Baker Hughes, a GE company, LLC
|
|
99.0000%
|
|
US SCS Partner LLC
|
|
1.0000%
|
(4)
|
Baker Hughes International Holdings S.à r.l.
|
|
|
|
Baker Hughes International Partners S.à r.l.
|
|
99.9500%
|
|
Other subsidiaries of Baker Hughes, a GE company, LLC
|
|
0.0500%
|
(5)
|
Baker Hughes Luxembourg Holdings S.C.A.
|
|
|
|
Baker Hughes Holdings I B.V.
|
|
37.6972%
|
|
Other subsidiaries of Baker Hughes, a GE company, LLC
|
|
62.3008%
|
Date:
|
February 23, 2018
|
By:
|
|
/s/ Lorenzo Simonelli
|
|
|
|
|
Lorenzo Simonelli
President and Chief Executive Officer
|
Date:
|
February 23, 2018
|
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:
|
|
February 23, 2018
|
|
|
|
|
|
/s/ Brian Worrell
|
Name:
|
|
Brian Worrell
|
Title:
|
|
Chief Financial Officer
|
Date:
|
|
February 23, 2018
|