þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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81-4403168
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(State or other jurisdiction
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(I.R.S. Employer Identification No.)
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of incorporation or organization)
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17021 Aldine Westfield, Houston, Texas - 77073-5101
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(Address of principal executive offices)
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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Emerging growth company
o
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(Do not check if a smaller reporting company)
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Page No
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Three Months Ended March 31,
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|||||
(In millions, except per share amounts)
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2018
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2017
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||||
Revenue:
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Sales of goods
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$
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3,160
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$
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2,239
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Sales of services
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2,239
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825
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Total revenue
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5,399
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3,064
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Costs and expenses:
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Cost of goods sold
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2,800
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1,846
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Cost of services sold
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1,758
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532
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Selling, general and administrative expenses
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674
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492
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Restructuring, impairment and other
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162
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42
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Merger and related costs
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46
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66
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Total costs and expenses
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5,440
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2,978
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Operating income (loss)
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(41
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)
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86
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Other non operating income, net
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2
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8
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Interest expense, net
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(46
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)
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(20
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)
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Income (loss) before income taxes and equity in loss of affiliate
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(85
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)
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74
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Equity in loss of affiliate
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(20
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)
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—
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Benefit (provision) for income taxes
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86
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(8
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)
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Net income (loss)
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(19
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)
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66
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Less: Net income attributable to GE O&G pre-merger
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—
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68
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Less: Net loss attributable to noncontrolling interests
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(89
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)
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(2
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)
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Net income attributable to Baker Hughes, a GE company
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$
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70
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$
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—
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Per share amounts:
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Basic earnings per Class A common stock
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$
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0.17
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Diluted earnings per Class A common stock
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0.17
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Cash dividend per Class A common stock
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$
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0.18
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Three Months Ended March 31,
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(In millions)
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2018
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2017
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Net income (loss)
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$
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(19
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$
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66
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Less: Net income attributable to GE O&G pre-merger
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—
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68
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Less: Net loss attributable to noncontrolling interests
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(89
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)
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(2
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Net income attributable to Baker Hughes, a GE company
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70
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—
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Other comprehensive income (loss):
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Investment securities
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—
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26
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Foreign currency translation adjustments
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312
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46
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Cash flow hedges
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7
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4
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Benefit plans
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(3
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)
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(1
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Other comprehensive income
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316
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75
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Less: Other comprehensive income attributable to GE O&G pre-merger
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—
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73
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Less: Other comprehensive income attributable to noncontrolling interests
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198
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2
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Other comprehensive income attributable to Baker Hughes, a GE company
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118
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—
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Comprehensive income
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297
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141
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Less: Comprehensive income attributable to GE O&G pre-merger
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—
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141
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Less: Comprehensive income attributable to noncontrolling interests
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109
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—
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Comprehensive income attributable to Baker Hughes, a GE company
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$
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188
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$
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—
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(In millions, except par value)
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March 31, 2018
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December 31, 2017
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ASSETS
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||||||
Current assets:
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Cash, cash equivalents and restricted cash
(1)
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$
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5,631
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$
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7,030
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Current receivables, net
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5,865
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6,015
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Inventories, net
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4,696
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4,507
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All other current assets
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862
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872
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Total current assets
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17,054
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18,424
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Property, plant and equipment (net of accumulated depreciation of $3,049 and $2,817)
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6,593
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6,959
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Goodwill
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20,435
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19,927
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Other intangible assets, net
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6,203
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6,358
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Contract and other deferred assets
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1,931
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2,044
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All other assets
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1,718
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2,073
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Deferred income taxes
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1,287
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715
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Total assets
(1)
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$
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55,221
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$
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56,500
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LIABILITIES AND EQUITY
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Current liabilities:
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Accounts payable
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$
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3,439
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$
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3,377
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Short-term debt and current portion of long-term debt
(1)
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1,176
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2,037
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Progress collections and deferred income
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1,676
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1,775
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All other current liabilities
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2,034
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2,038
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Total current liabilities
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8,325
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9,227
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Long-term debt
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6,296
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6,312
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Deferred income taxes
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424
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490
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Liabilities for pensions and other postretirement benefits
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1,172
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1,172
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All other liabilities
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909
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889
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Equity:
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Class A Common Stock, $0.0001 par value - 2,000 authorized, 416 issued and outstanding as of March 31, 2018
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—
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—
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Class B Common Stock, $0.0001 par value - 1,250 authorized, 696 issued and outstanding as of March 31, 2018
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—
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—
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Capital in excess of par value
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14,845
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15,083
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Retained loss
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(8
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(103
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)
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Accumulated other comprehensive loss
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(585
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(703
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)
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Baker Hughes, a GE company equity
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14,252
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14,277
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Noncontrolling interests
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23,843
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24,133
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Total equity
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38,095
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38,410
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Total liabilities and equity
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$
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55,221
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$
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56,500
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(1)
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Total assets include
$992 million
and
$1,124 million
of assets held on behalf of GE, of which
$836 million
and
$997 million
is cash and cash equivalents and
$156 million
and
$127 million
is investment securities at
March 31, 2018
and
December 31, 2017
, respectively, and a corresponding amount of liability is reported in short-term borrowings. See "Note 16. Related Party Transactions" for further details.
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(In millions, except per share amounts)
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Class A
Common Stock |
Class B
Common Stock |
Capital
in Excess of Par Value |
Parent's Net Investment
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Retained
Loss |
Accumulated
Other Comprehensive Loss |
Non-controlling
Interests |
Total Equity
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||||||||||||||||
Balance at December 31, 2017
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$
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—
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$
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—
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$
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15,083
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$
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—
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$
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(103
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)
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$
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(703
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)
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$
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24,133
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$
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38,410
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Effect of adoption of ASU 2016-16 on taxes
(1)
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25
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|
42
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67
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Comprehensive income (loss):
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Net income (loss)
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70
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(89
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)
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(19
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)
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Other comprehensive income
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|
|
118
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|
198
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316
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Cash dividend ($0.18 per share)
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(76
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)
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(127
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)
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(203
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)
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Repurchase and cancellation of Class A and Class B common stock
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(187
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)
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(313
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)
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(500
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)
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Stock-based compensation cost
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30
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30
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Other
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(5
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)
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(1
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)
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(6
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)
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Balance at March 31, 2018
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$
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—
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|
$
|
—
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$
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14,845
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|
$
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—
|
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$
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(8
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)
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$
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(585
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)
|
$
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23,843
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|
$
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38,095
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|
(1)
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See "Note 1. Basis of Presentation and Summary of Significant Accounting Policies" for further details.
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(In millions)
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Class A
Common Stock |
Class B
Common Stock |
Capital
in Excess of Par Value |
Parent's Net Investment
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Retained
Loss |
Accumulated
Other Comprehensive Loss |
Non-controlling
Interests |
Total Equity
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||||||||||||||||
Balance at December 31, 2016
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$
|
—
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|
$
|
—
|
|
$
|
—
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|
$
|
16,001
|
|
$
|
—
|
|
$
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(1,888
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)
|
$
|
167
|
|
$
|
14,280
|
|
Comprehensive income (loss):
|
|
|
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Net income (loss)
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|
|
68
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|
|
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(2
|
)
|
66
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|
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Other comprehensive income
|
|
|
|
|
|
73
|
|
2
|
|
75
|
|
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Changes in Parent's net investment
|
|
|
|
221
|
|
|
|
|
221
|
|
||||||||||||||
Other
|
|
|
|
|
|
|
10
|
|
10
|
|
||||||||||||||
Balance at March 31, 2017
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
16,290
|
|
$
|
—
|
|
$
|
(1,815
|
)
|
$
|
177
|
|
$
|
14,652
|
|
|
Three Months Ended March 31,
|
|||||
(In millions)
|
2018
|
2017
|
||||
Cash flows from operating activities:
|
|
|
||||
Net income (loss)
|
$
|
(19
|
)
|
$
|
66
|
|
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
|
|
|
||||
Depreciation and amortization
|
388
|
|
132
|
|
||
Provision for deferred income taxes
|
(233
|
)
|
(115
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
||||
Current receivables
|
125
|
|
(18
|
)
|
||
Inventories
|
(134
|
)
|
24
|
|
||
Accounts payable
|
101
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|
(16
|
)
|
||
Progress collections and deferred income
|
(124
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)
|
(130
|
)
|
||
Contract and other deferred assets
|
140
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|
(222
|
)
|
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Other operating items, net
|
50
|
|
(67
|
)
|
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Net cash flows from (used in) operating activities
|
294
|
|
(346
|
)
|
||
Cash flows from investing activities:
|
|
|
||||
Expenditures for capital assets
|
(177
|
)
|
(76
|
)
|
||
Proceeds from disposal of assets
|
108
|
|
8
|
|
||
Other investing items, net
|
(65
|
)
|
1
|
|
||
Net cash flows used in investing activities
|
(134
|
)
|
(67
|
)
|
||
Cash flows from financing activities:
|
|
|
||||
Net borrowings (repayments) of short-term debt and other borrowings
|
(181
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)
|
227
|
|
||
Repayment of long-term debt
|
(648
|
)
|
—
|
|
||
Net transfer from Parent
|
—
|
|
228
|
|
||
Dividends paid
|
(76
|
)
|
—
|
|
||
Distributions to noncontrolling interest
|
(127
|
)
|
—
|
|
||
Repurchase of Class A common stock
|
(190
|
)
|
—
|
|
||
Repurchase of GE common units by BHGE LLC
|
(323
|
)
|
—
|
|
||
Other financing items, net
|
(8
|
)
|
2
|
|
||
Net cash flows from (used in) financing activities
|
(1,553
|
)
|
457
|
|
||
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash
|
(6
|
)
|
2
|
|
||
Increase (decrease) in cash, cash equivalents and restricted cash
|
(1,399
|
)
|
46
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
7,030
|
|
981
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
5,631
|
|
$
|
1,027
|
|
Supplemental cash flows disclosures:
|
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|
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Income taxes paid
|
$
|
82
|
|
$
|
48
|
|
Interest paid
|
$
|
72
|
|
$
|
8
|
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||||||
|
December 31, 2017
|
September 30, 2017
|
June 30, 2017
|
March 31, 2017
|
|
December 31, 2017
|
December 31, 2016
|
||||||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||||||
Sales of goods
|
$
|
86
|
|
$
|
13
|
|
$
|
37
|
|
$
|
27
|
|
|
$
|
163
|
|
$
|
(26
|
)
|
Sales of services
|
(50
|
)
|
(86
|
)
|
(33
|
)
|
(74
|
)
|
|
(243
|
)
|
(161
|
)
|
||||||
Total revenue
|
36
|
|
(73
|
)
|
4
|
|
(47
|
)
|
|
(80
|
)
|
(187
|
)
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Operating loss
|
(14
|
)
|
(64
|
)
|
(6
|
)
|
(91
|
)
|
|
(175
|
)
|
(226
|
)
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Net income (loss)
|
1
|
|
(84
|
)
|
(10
|
)
|
(57
|
)
|
|
(150
|
)
|
(149
|
)
|
||||||
Net income (loss) attributable to BHGE
|
1
|
|
(31
|
)
|
—
|
|
—
|
|
|
(30
|
)
|
—
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Per share amounts:
|
|
|
|
|
|
|
|
||||||||||||
Basic and diluted loss per Class A common stock
|
—
|
|
(0.07
|
)
|
|
|
|
(0.07
|
)
|
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||
|
March 31, 2018
|
March 31, 2017
|
|
December 31, 2017
|
December 31, 2016
|
||||||||
Operating income (loss)
|
$
|
(5
|
)
|
$
|
2
|
|
|
$
|
(1
|
)
|
$
|
24
|
|
Non operating income (loss)
|
5
|
|
(2
|
)
|
|
1
|
|
(24
|
)
|
|
Three Months Ended March 31,
|
|||||
Total Revenue
|
2018
|
2017
|
||||
U.S.
|
$
|
1,483
|
|
$
|
721
|
|
Non-U.S.
|
3,916
|
|
2,343
|
|
||
Total
|
$
|
5,399
|
|
$
|
3,064
|
|
Preliminary identifiable assets acquired and liabilities assumed
|
Estimated fair value at July 3, 2017
|
||
Assets
|
|
||
Cash and equivalents
|
$
|
4,133
|
|
Current receivables
|
2,342
|
|
|
Inventories
|
1,706
|
|
|
Property, plant and equipment
|
4,571
|
|
|
Intangible assets
(1)
|
4,078
|
|
|
All other assets
|
1,596
|
|
|
Liabilities
|
|
||
Accounts payable
|
(1,209
|
)
|
|
Borrowings
|
(3,370
|
)
|
|
Deferred income taxes
(2)
|
(326
|
)
|
|
Liabilities for pension and other postretirement benefits
|
(654
|
)
|
|
All other liabilities
|
(1,424
|
)
|
|
Total identifiable net assets
|
$
|
11,443
|
|
Noncontrolling interest associated with net assets acquired
|
(76
|
)
|
|
Goodwill
(3)
|
13,431
|
|
|
Total purchase consideration
|
$
|
24,798
|
|
(1)
|
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) |
||
Trade name - Baker Hughes
|
$
|
2,100
|
|
Indefinite life
|
Customer relationships
|
1,320
|
|
15
|
|
Patents and technology
|
465
|
|
10
|
|
In-process research and development
|
70
|
|
Indefinite life
|
|
Capitalized software
|
62
|
|
3-7
|
|
Trade names - other
|
40
|
|
10
|
|
Favorable lease contracts & others
|
21
|
|
10
|
|
Total
|
$
|
4,078
|
|
|
(2)
|
Includes approximately
$563 million
of net deferred tax liabilities related to the estimated fair value of intangible assets included in the preliminary purchase consideration and approximately
$237 million
of other net deferred tax assets, including non-U.S. loss carryforwards net of valuation allowances and offsetting liabilities for unrecognized benefits.
|
(3)
|
Goodwill represents the excess of the total purchase consideration over fair value of the net assets recognized and represents the future economic benefits that we believe will result from combining the operations of GE O&G and Baker Hughes, including expected future synergies and operating efficiencies. Goodwill resulting from the Transactions has been preliminarily allocated to the Oilfield Services segment, of which
$67 million
is deductible for tax purposes.
|
|
Three Months Ended March 31, 2017
|
||
Revenue
|
$
|
5,324
|
|
Net loss
|
(6
|
)
|
|
Net income attributable to the Company
|
6
|
|
|
Basic earnings per Class A common stock
|
0.01
|
|
|
Diluted earnings per Class A common stock
(1)
|
0.01
|
|
(1)
|
The calculation of diluted loss per Class A common stock excludes shares potentially issuable under stock-based incentive compensation plans and the exchange of Class B common stock with Class A common stock under the Exchange Agreement, as their effect, if included, would be anti-dilutive.
|
|
March 31, 2018
|
December 31, 2017
|
||||
Customer receivables
|
$
|
4,732
|
|
$
|
4,700
|
|
Related parties
|
691
|
|
801
|
|
||
Other
|
788
|
|
844
|
|
||
Total current receivables
|
6,211
|
|
6,345
|
|
||
Less: Allowance for doubtful accounts
|
(346
|
)
|
(330
|
)
|
||
Total current receivables, net
|
$
|
5,865
|
|
$
|
6,015
|
|
|
March 31, 2018
|
December 31, 2017
|
||||
Finished goods
|
$
|
2,527
|
|
$
|
2,577
|
|
Work in process and raw material
|
2,169
|
|
1,930
|
|
||
Total inventories, net
|
$
|
4,696
|
|
$
|
4,507
|
|
|
Oilfield Services
|
Oilfield Equipment
|
Turbo-machinery & Process Solutions
|
Digital Solutions
|
Total
|
||||||||||
Balance at December 31, 2016, gross
|
$
|
2,779
|
|
$
|
3,852
|
|
$
|
1,814
|
|
$
|
1,989
|
|
$
|
10,434
|
|
Accumulated impairment at December 31, 2016
|
(2,633
|
)
|
(867
|
)
|
—
|
|
(254
|
)
|
(3,754
|
)
|
|||||
Balance at December 31, 2016
|
146
|
|
2,985
|
|
1,814
|
|
1,735
|
|
6,680
|
|
|||||
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
|
|
|||||
Purchase accounting adjustments
(1)
|
379
|
|
—
|
|
—
|
|
—
|
|
379
|
|
|||||
Currency exchange and others
|
28
|
|
33
|
|
41
|
|
27
|
|
129
|
|
|||||
Balance at March 31, 2018
|
$
|
13,612
|
|
$
|
3,067
|
|
$
|
1,947
|
|
$
|
1,809
|
|
$
|
20,435
|
|
(1)
|
Includes goodwill associated with the acquisition of Baker Hughes. This amount and its allocations to segments are preliminary.
|
|
March 31, 2018
|
December 31, 2017
|
||||||||||||||||
|
Gross
Carrying Amount |
Accumulated
Amortization |
Net
|
Gross
Carrying Amount |
Accumulated
Amortization |
Net
|
||||||||||||
Technology
|
$
|
1,118
|
|
$
|
(479
|
)
|
$
|
639
|
|
$
|
1,177
|
|
$
|
(440
|
)
|
$
|
737
|
|
Customer relationships
|
3,279
|
|
(877
|
)
|
2,402
|
|
3,202
|
|
(819
|
)
|
2,383
|
|
||||||
Capitalized software
|
1,138
|
|
(753
|
)
|
385
|
|
1,130
|
|
(697
|
)
|
433
|
|
||||||
Trade names and trademarks
|
726
|
|
(192
|
)
|
534
|
|
757
|
|
(159
|
)
|
598
|
|
||||||
Other
|
14
|
|
(1
|
)
|
14
|
|
10
|
|
—
|
|
10
|
|
||||||
Finite-lived intangible assets
|
6,275
|
|
(2,302
|
)
|
3,974
|
|
6,276
|
|
(2,115
|
)
|
4,161
|
|
||||||
Indefinite-lived intangible assets
(1)
|
2,229
|
|
—
|
|
2,229
|
|
2,197
|
|
—
|
|
2,197
|
|
||||||
Total intangible assets
|
$
|
8,504
|
|
$
|
(2,302
|
)
|
$
|
6,203
|
|
$
|
8,473
|
|
$
|
(2,115
|
)
|
$
|
6,358
|
|
(1)
|
Indefinite-lived intangible assets are principally comprised of the Baker Hughes trade name.
|
Year
|
Estimated Amortization Expense
|
||
Remainder of 2018
|
$
|
338
|
|
2019
|
375
|
|
|
2020
|
348
|
|
|
2021
|
300
|
|
|
2022
|
266
|
|
|
2023
|
247
|
|
|
March 31, 2018
|
December 31, 2017
|
||||
Long-term product service agreements
|
$
|
615
|
|
$
|
589
|
|
Long-term equipment contract revenue
(1)
|
1,108
|
|
1,095
|
|
||
Contract assets (total revenue in excess of billings)
(2)
|
1,723
|
|
1,684
|
|
||
Deferred inventory costs
(3)
|
208
|
|
360
|
|
||
Contract and other deferred assets
|
$
|
1,931
|
|
$
|
2,044
|
|
(1)
|
Reflects revenue earned in excess of billings on our long-term contracts to construct technically complex equipment.
|
(2)
|
Contract assets (total revenue in excess of billings) were
$1,233 million
as of January 1, 2017.
|
(3)
|
Deferred inventory costs were
$276 million
as of January 1, 2017, which represents cost deferral for shipped goods and other costs where the criteria for revenue recognition has not yet been met.
|
|
March 31, 2018
|
December 31, 2017
|
||||
Progress collections
|
$
|
1,474
|
|
$
|
1,456
|
|
Deferred income
|
202
|
|
319
|
|
||
Progress collections and deferred income (contract liabilities)
(1)
|
$
|
1,676
|
|
$
|
1,775
|
|
(1)
|
Progress collections and deferred income (contract liabilities) was
$2,038 million
at January 1, 2017.
|
|
March 31, 2018
|
December 31, 2017
|
||||
Short-term borrowings
|
|
|
||||
Short-term bank borrowings
|
$
|
124
|
|
$
|
171
|
|
Current portion of long-term borrowings
|
—
|
|
639
|
|
||
Short-term borrowings from GE
|
992
|
|
1,124
|
|
||
Other borrowings
|
60
|
|
103
|
|
||
Total short-term borrowings
|
$
|
1,176
|
|
$
|
2,037
|
|
|
|
|
||||
Long-term borrowings
|
|
|
||||
3.2% Senior Notes due August 2021
|
$
|
525
|
|
$
|
526
|
|
2.773% Senior Notes due December 2022
|
1,245
|
|
1,244
|
|
||
8.55% Debentures due June 2024
|
134
|
|
135
|
|
||
3.337% Senior Notes due December 2027
|
1,343
|
|
1,342
|
|
||
6.875% Notes due January 2029
|
303
|
|
308
|
|
||
5.125% Notes due September 2040
|
1,310
|
|
1,311
|
|
||
4.08% Senior Notes due December 2047
|
1,337
|
|
1,337
|
|
||
Capital leases
|
79
|
|
87
|
|
||
Other long-term borrowings
|
20
|
|
22
|
|
||
Total long-term borrowings
|
6,296
|
|
6,312
|
|
||
Total borrowings
|
$
|
7,472
|
|
$
|
8,349
|
|
|
Pension Benefits
|
|||||
|
2018
|
2017
|
||||
Service cost
|
$
|
5
|
|
$
|
3
|
|
Interest cost
|
18
|
|
7
|
|
||
Expected return on plan assets
|
(30
|
)
|
(10
|
)
|
||
Amortization of prior service credit
|
—
|
|
—
|
|
||
Amortization of net actuarial (gain) loss
|
2
|
|
3
|
|
||
Net periodic cost (benefit)
|
$
|
(5
|
)
|
$
|
3
|
|
|
|
|
|
|
|
Class A Common Stock
|
Class B Common Stock
|
||
Balance at December 31, 2017
|
422,208
|
|
706,985
|
|
Issue of shares upon vesting of restricted stock units
(1)
|
316
|
|
—
|
|
Issue of shares on exercises of stock options
(1)
|
66
|
|
—
|
|
Stock repurchase program
(2) (3)
|
(6,290
|
)
|
(10,524
|
)
|
Balance at March 31, 2018
|
416,300
|
|
696,460
|
|
(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, paired with common units, will be repurchased by the Company at par value. The
$3 billion
repurchase authorization is the aggregate authorization for repurchases of Class A common stock and Class B common stock together with its paired common unit. At March 31, 2018, BHGE LLC had authorization remaining to repurchase up to approximately
$2 billion
of its common units from BHGE and GE.
|
(3)
|
During the three months ended
March 31, 2018
, we repurchased and canceled
6,290,420
shares of Class A common stock for a total of
$187 million
. We also repurchased and canceled
10,523,873
shares of Class B common stock from GE together with the paired common units of BHGE LLC for
$313 million
.
|
|
Investment Securities
|
Foreign Currency Translation Adjustments
|
Cash Flow Hedges
|
Benefit Plans
|
Accumulated Other Comprehensive Loss
|
||||||||||
Balance at December 31, 2017
|
$
|
1
|
|
$
|
(682
|
)
|
$
|
1
|
|
$
|
(23
|
)
|
$
|
(703
|
)
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
312
|
|
8
|
|
(3
|
)
|
317
|
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Deferred taxes
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
(1
|
)
|
|||||
Other comprehensive income (loss)
|
—
|
|
312
|
|
7
|
|
(3
|
)
|
316
|
|
|||||
Less: Other comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
196
|
|
4
|
|
(2
|
)
|
198
|
|
|||||
Balance at March 31, 2018
|
$
|
1
|
|
$
|
(566
|
)
|
$
|
4
|
|
$
|
(24
|
)
|
$
|
(585
|
)
|
|
Investment Securities
|
Foreign Currency Translation Adjustments
|
Cash Flow Hedges
|
Benefit Plans
|
Accumulated Other Comprehensive Loss
|
||||||||||
Balance at December 31, 2016
|
$
|
—
|
|
$
|
(1,795
|
)
|
$
|
(10
|
)
|
$
|
(83
|
)
|
$
|
(1,888
|
)
|
Other comprehensive income (loss) before reclassifications
|
39
|
|
49
|
|
(2
|
)
|
(2
|
)
|
84
|
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
1
|
|
—
|
|
7
|
|
(2
|
)
|
6
|
|
|||||
Deferred taxes
|
(14
|
)
|
(3
|
)
|
(1
|
)
|
3
|
|
(15
|
)
|
|||||
Other comprehensive income (loss)
|
26
|
|
46
|
|
4
|
|
(1
|
)
|
75
|
|
|||||
Less: Other comprehensive income attributable to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
2
|
|
2
|
|
|||||
Balance at March 31, 2017
|
$
|
26
|
|
$
|
(1,749
|
)
|
$
|
(6
|
)
|
$
|
(86
|
)
|
$
|
(1,815
|
)
|
|
March 31, 2018
|
December 31, 2017
|
||||
GE's interest in BHGE LLC
|
$
|
23,704
|
|
$
|
23,993
|
|
Other noncontrolling interests
|
139
|
|
140
|
|
||
Total noncontrolling interests
|
$
|
23,843
|
|
$
|
24,133
|
|
|
Three Months Ended March 31,
|
|||||
(In millions, except per share amounts)
|
2018
|
2017
|
||||
Net income (loss)
|
$
|
(19
|
)
|
$
|
66
|
|
Less: Net income attributable to GE O&G pre-merger
|
—
|
|
68
|
|
||
Less: Net loss attributable to noncontrolling interests
|
(89
|
)
|
(2
|
)
|
||
Net income attributable to BHGE
|
$
|
70
|
|
$
|
—
|
|
|
|
|
||||
Weighted average shares outstanding:
|
|
|
||||
Class A basic
|
421
|
|
|
|||
Class A diluted
|
422
|
|
|
|||
Net income per share attributable to common stockholders:
|
|
|
||||
Class A basic
|
$
|
0.17
|
|
|
||
Class A diluted
|
0.17
|
|
|
|
March 31, 2018
|
December 31, 2017
|
||||||||||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Net Balance
|
Level 1
|
Level 2
|
Level 3
|
Net Balance
|
||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Derivatives
|
$
|
—
|
|
$
|
205
|
|
$
|
—
|
|
$
|
205
|
|
$
|
—
|
|
$
|
150
|
|
$
|
—
|
|
$
|
150
|
|
Investment securities
|
75
|
|
—
|
|
326
|
|
401
|
|
81
|
|
8
|
|
304
|
|
393
|
|
||||||||
Total assets
|
75
|
|
205
|
|
326
|
|
606
|
|
81
|
|
158
|
|
304
|
|
543
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivatives
|
—
|
|
(129
|
)
|
—
|
|
(129
|
)
|
—
|
|
(95
|
)
|
—
|
|
(95
|
)
|
||||||||
Total liabilities
|
$
|
—
|
|
$
|
(129
|
)
|
$
|
—
|
|
$
|
(129
|
)
|
$
|
—
|
|
$
|
(95
|
)
|
$
|
—
|
|
$
|
(95
|
)
|
Balance at December 31, 2017
|
$
|
304
|
|
Purchases
|
34
|
|
|
Proceeds at maturity
|
(12
|
)
|
|
Balance at March 31, 2018
|
$
|
326
|
|
|
March 31, 2018
|
December 31, 2017
|
||||||||||||||||||||||
|
Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Estimated Fair Value
|
Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Estimated Fair Value
|
||||||||||||||||
Investment securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-U.S. debt securities
|
$
|
325
|
|
$
|
1
|
|
$
|
—
|
|
$
|
326
|
|
$
|
310
|
|
$
|
2
|
|
$
|
—
|
|
$
|
312
|
|
Equity securities
|
75
|
|
—
|
|
—
|
|
75
|
|
81
|
|
—
|
|
—
|
|
81
|
|
||||||||
Total
|
$
|
400
|
|
$
|
1
|
|
$
|
—
|
|
$
|
401
|
|
$
|
391
|
|
$
|
2
|
|
$
|
—
|
|
$
|
393
|
|
|
March 31, 2018
|
December 31, 2017
|
||||||||||
|
Assets
|
(Liabilities)
|
Assets
|
(Liabilities)
|
||||||||
Derivatives accounted for as hedges
|
|
|
|
|
||||||||
Currency exchange contracts
|
$
|
10
|
|
$
|
—
|
|
$
|
6
|
|
$
|
—
|
|
|
|
|
|
|
||||||||
Derivatives not accounted for as hedges
|
|
|
|
|
||||||||
Currency exchange contracts
|
195
|
|
(129
|
)
|
144
|
|
(95
|
)
|
||||
Total derivatives
|
$
|
205
|
|
$
|
(129
|
)
|
$
|
150
|
|
$
|
(95
|
)
|
Carrying amount related to derivatives
|
March 31, 2018
|
December 31, 2017
|
||||
Derivative assets
|
$
|
205
|
|
$
|
150
|
|
Derivative liabilities
|
(129
|
)
|
(95
|
)
|
||
Net derivatives
|
$
|
76
|
|
$
|
55
|
|
|
Three Months Ended March 31,
|
|||||||||||
|
2018
|
2017
|
||||||||||
|
Cash Flow Hedges
|
Economic Hedges
|
Cash Flow Hedges
|
Economic Hedges
|
||||||||
Effect on hedging instrument
|
$
|
(8
|
)
|
$
|
17
|
|
$
|
2
|
|
$
|
(8
|
)
|
Effect on underlying
|
8
|
|
(15
|
)
|
(2
|
)
|
9
|
|
||||
Effect on earnings
(1)
|
—
|
|
2
|
|
—
|
|
1
|
|
(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.
|
|
Three Months Ended March 31,
|
|||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||
|
Gain (loss) recognized in AOCI
|
Gain (loss) reclassified from AOCI to earnings
|
||||||||||
Currency exchange contracts
|
$
|
8
|
|
$
|
(2
|
)
|
$
|
—
|
|
$
|
(7
|
)
|
|
Three Months Ended March 31,
|
|||||
Segments revenue
|
2018
|
2017
|
||||
Oilfield Services
|
$
|
2,678
|
|
$
|
212
|
|
Oilfield Equipment
|
664
|
|
716
|
|
||
Turbomachinery & Process Solutions
|
1,460
|
|
1,644
|
|
||
Digital Solutions
|
598
|
|
491
|
|
||
Total
|
$
|
5,399
|
|
$
|
3,064
|
|
|
Three Months Ended March 31,
|
|||||
Segment income (loss) before income taxes
|
2018
|
2017
|
||||
Oilfield Services
|
$
|
141
|
|
$
|
(57
|
)
|
Oilfield Equipment
|
(6
|
)
|
50
|
|
||
Turbomachinery & Process Solutions
|
119
|
|
252
|
|
||
Digital Solutions
|
73
|
|
84
|
|
||
Total segment
|
327
|
|
329
|
|
||
Corporate
|
(98
|
)
|
(120
|
)
|
||
Inventory impairment
(1)
|
(61
|
)
|
(15
|
)
|
||
Restructuring, impairment and other
|
(162
|
)
|
(42
|
)
|
||
Merger and related costs
|
(46
|
)
|
(66
|
)
|
||
Other non operating income, net
|
2
|
|
8
|
|
||
Interest expense, net
|
(46
|
)
|
(20
|
)
|
||
Total
|
$
|
(85
|
)
|
$
|
74
|
|
(1)
|
Charges for inventory impairments are reported in the "Cost of goods sold" caption of the condensed consolidated and combined statements of income (loss).
|
|
|
|
Balance at December 31, 2017, and 2016, respectively
|
$
|
164
|
|
$
|
74
|
|
Provisions
|
10
|
|
6
|
|
||
Expenditures
|
(7
|
)
|
(12
|
)
|
||
Other
|
2
|
|
—
|
|
||
Balance at March 31, 2018, and 2017, respectively
|
$
|
169
|
|
$
|
68
|
|
|
Three Months Ended March 31,
|
|||||
|
2018
|
2017
|
||||
Oilfield Services
|
$
|
59
|
|
$
|
12
|
|
Oilfield Equipment
|
12
|
|
1
|
|
||
Turbomachinery & Process Solutions
|
28
|
|
10
|
|
||
Digital Solutions
|
9
|
|
10
|
|
||
Corporate
|
17
|
|
2
|
|
||
Total
|
$
|
125
|
|
$
|
35
|
|
|
Three Months Ended March 31,
|
|||||
|
2018
|
2017
|
||||
Property, plant & equipment, net
|
$
|
19
|
|
$
|
10
|
|
Employee-related termination expenses
|
83
|
|
15
|
|
||
Asset relocation costs
|
5
|
|
3
|
|
||
Environmental remediation costs
|
3
|
|
3
|
|
||
Contract termination fees
|
7
|
|
1
|
|
||
Other incremental costs
|
8
|
|
3
|
|
||
Total
|
$
|
125
|
|
$
|
35
|
|
•
|
North America onshore activity: in the first quarter of 2018, we experienced an acceleration in rig count growth, as compared to the first quarter of 2017. We expect the increased activity in North America to continue to grow in 2018, however, at a slower pace than seen in the last few quarters. We remain optimistic about the outlook.
|
•
|
International onshore activity: we have seen a moderate increase in rig count activity in the first quarter of 2018 and expect this growth to continue for the remainder of the year, 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.
|
•
|
Offshore projects: although commodity prices increased in the last quarter, 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. Subsea tree awards increased in 2017, and we 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.
|
•
|
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 the short term. We do, however, view the long term economics of the LNG industry as positive given our outlook for supply and demand.
|
•
|
Refinery, petrochemical and industrial projects: in refining, we believe large, complex refineries should gain advantage in a more competitive, oversupplied landscape in 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.
|
|
Three Months Ended March 31,
|
|||||
|
2018
|
2017
|
||||
Brent oil price ($/Bbl)
(1)
|
$
|
66.86
|
|
$
|
53.59
|
|
WTI oil price ($/Bbl)
(2)
|
62.91
|
|
51.62
|
|
||
Natural gas price ($/mmBtu)
(3)
|
3.08
|
|
3.02
|
|
(1)
|
Energy Information Administration (EIA) Europe Brent Spot Price per Barrel
|
(2)
|
EIA Cushing, OK WTI (West Texas Intermediate) spot price
|
(3)
|
EIA Henry Hub Natural Gas Spot Price per million British Thermal Unit
|
|
Three Months Ended March 31,
|
$ Change
|
|||||||
|
2018
|
2017
|
|||||||
Revenue:
|
|
|
|
||||||
Oilfield Services
|
$
|
2,678
|
|
$
|
212
|
|
$
|
2,465
|
|
Oilfield Equipment
|
664
|
|
716
|
|
(52
|
)
|
|||
Turbomachinery & Process Solutions
|
1,460
|
|
1,644
|
|
(184
|
)
|
|||
Digital Solutions
|
598
|
|
491
|
|
107
|
|
|||
Total
|
$
|
5,399
|
|
$
|
3,064
|
|
$
|
2,335
|
|
|
Three Months Ended March 31,
|
$ Change
|
|||||||
|
2018
|
2017
|
|||||||
Segment operating income (loss):
|
|
|
|
||||||
Oilfield Services
|
$
|
141
|
|
$
|
(57
|
)
|
$
|
198
|
|
Oilfield Equipment
|
(6
|
)
|
50
|
|
(56
|
)
|
|||
Turbomachinery & Process Solutions
|
119
|
|
252
|
|
(133
|
)
|
|||
Digital Solutions
|
73
|
|
84
|
|
(11
|
)
|
|||
Total segment operating income
|
327
|
|
329
|
|
(2
|
)
|
|||
Corporate
|
(98
|
)
|
(120
|
)
|
22
|
|
|||
Inventory impairment
|
(61
|
)
|
(15
|
)
|
(46
|
)
|
|||
Restructuring, impairment and other
|
(162
|
)
|
(42
|
)
|
(120
|
)
|
|||
Merger and related costs
|
(46
|
)
|
(66
|
)
|
20
|
|
|||
Operating income (loss)
|
(41
|
)
|
86
|
|
(126
|
)
|
|||
Other non operating income, net
|
2
|
|
8
|
|
(6
|
)
|
|||
Interest expense, net
|
(46
|
)
|
(20
|
)
|
(26
|
)
|
|||
Income (loss) before income taxes and equity in loss of affiliate
|
(85
|
)
|
74
|
|
(159
|
)
|
|||
Equity in loss of affiliate
|
(20
|
)
|
—
|
|
(20
|
)
|
|||
Benefit (provision) for income taxes
|
86
|
|
(8
|
)
|
94
|
|
|||
Net income (loss)
|
$
|
(19
|
)
|
$
|
66
|
|
$
|
(85
|
)
|
(In millions)
|
2018
|
2017
|
||||
Operating activities
|
$
|
294
|
|
$
|
(346
|
)
|
Investing activities
|
(134
|
)
|
(67
|
)
|
||
Financing activities
|
(1,553
|
)
|
457
|
|
Period
|
Total Number of Shares Purchased
(1)
|
Average
Price Paid
Per Share
(2)
|
Total Number of Shares Purchased as Part of a Publicly Announced Program
(3)
|
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program
(4)
|
|||||
January 1-31, 2018
|
139,429
|
|
$
|
33.15
|
|
—
|
$
|
937,500,428
|
|
February 1-28, 2018
|
1,638
|
|
$
|
34.27
|
|
—
|
$
|
937,500,428
|
|
March 1-31, 2018
|
6,290,628
|
|
$
|
29.73
|
|
6,290,420
|
$
|
750,494,213
|
|
Total
|
6,431,695
|
|
$
|
29.80
|
|
6,290,420
|
|
(1)
|
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.
|
(2)
|
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.
|
(3)
|
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, paired with common units, will be repurchased by the Company at par value. At
March 31, 2018
, BHGE LLC had authorization remaining to repurchase up to approximately $
2 billion
of its common units from BHGE and GE.
|
(4)
|
During the
three months ended March 31, 2018
, we repurchased and canceled approximately
six million
shares of Class A common stock at an average price of $29.73 per share (including commissions) for a total of
$187 million
. We also repurchased and canceled approximately
10.5 million
shares of Class B common stock from GE together with each paired common unit of BHGE LLC for $
313 million
.
|
|
||
|
||
|
||
|
||
|
||
|
||
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
(Registrant) |
|
|
|
|
|
Date:
|
April 27, 2018
|
By:
|
/s/ BRIAN WORRELL
|
|
|
Brian Worrell
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
Date:
|
April 27, 2018
|
By:
|
/s/ KURT CAMILLERI
|
|
|
Kurt Camilleri
|
|
|
|
Vice President, Controller and Chief Accounting Officer
|
|
|
|
||
Date:
|
April 27, 2018
|
By:
|
/s/ Lorenzo Simonelli
|
|
|
|
|
Lorenzo Simonelli
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
||
Date:
|
April 27, 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:
|
|
April 27, 2018
|
|
|
|
|
|
|
|
|
|
/s/ Brian Worrell
|
|
|
Name:
|
|
Brian Worrell
|
|
|
Title:
|
|
Chief Financial Officer
|
|
|
Date:
|
|
April 27, 2018
|
(1)
|
Amounts included are the total dollar value of proposed assessments received from MSHA during the
three months ended March 31, 2018
, regardless of whether the assessment has been challenged or appealed. Citations and orders can be contested and appealed, and as part of that process, are sometimes reduced in severity and amount, and sometimes dismissed. The number of citations, orders, and proposed assessments vary by inspector and also vary depending on the size and type of the operation.
|