QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction | (I.R.S. Employer Identification No.) | ||
of incorporation or organization) | |||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered |
- |
Large accelerated filer | ☐ | Accelerated filer | ☐ | ☑ | Smaller reporting company | Emerging growth company |
Page No. | ||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(In millions, except per unit amounts) | 2019 | 2018 | 2019 | 2018 | ||||||||
Revenue: | ||||||||||||
Sales of goods | $ | $ | $ | $ | ||||||||
Sales of services | ||||||||||||
Total revenue | ||||||||||||
Costs and expenses: | ||||||||||||
Cost of goods sold | ||||||||||||
Cost of services sold | ||||||||||||
Selling, general and administrative expenses | ||||||||||||
Restructuring, impairment and other | ||||||||||||
Separation and merger related costs | ||||||||||||
Total costs and expenses | ||||||||||||
Operating income | ||||||||||||
Other non operating income (loss), net | ( | ) | ( | ) | ||||||||
Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Income (loss) before income taxes and equity in loss of affiliate | ( | ) | ||||||||||
Equity in loss of affiliate | ( | ) | ( | ) | ||||||||
Provision for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Net income (loss) | ( | ) | ( | ) | ( | ) | ||||||
Less: Net income attributable to noncontrolling interests | ||||||||||||
Net income (loss) attributable to Baker Hughes, a GE company, LLC | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||
Cash distribution per common unit | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(In millions) | 2019 | 2018 | 2019 | 2018 | ||||||||
Net income (loss) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||
Less: Net income attributable to noncontrolling interests | ||||||||||||
Net income (loss) attributable to Baker Hughes, a GE company, LLC | ( | ) | ( | ) | ( | ) | ||||||
Other comprehensive income (loss): | ||||||||||||
Investment securities | ( | ) | ( | ) | ( | ) | ||||||
Foreign currency translation adjustments | ( | ) | ( | ) | ( | ) | ||||||
Cash flow hedges | ( | ) | ( | ) | ||||||||
Benefit plans | ( | ) | ( | ) | ||||||||
Other comprehensive income (loss) | ( | ) | ( | ) | ( | ) | ||||||
Less: Other comprehensive loss attributable to noncontrolling interests | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Other comprehensive income (loss) attributable to Baker Hughes, a GE company, LLC | ( | ) | ( | ) | ( | ) | ||||||
Comprehensive income (loss) | ( | ) | ( | ) | ( | ) | ||||||
Less: Comprehensive income attributable to noncontrolling interests | ||||||||||||
Comprehensive income (loss) attributable to Baker Hughes, a GE company, LLC | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) |
(In millions) | June 30, 2019 | December 31, 2018 | ||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents (1) | $ | $ | ||||
Current receivables, net | ||||||
Inventories, net | ||||||
All other current assets | ||||||
Total current assets | ||||||
Property, plant and equipment (net of accumulated depreciation of $3,918 and $3,625) | ||||||
Goodwill | ||||||
Other intangible assets, net | ||||||
Contract and other deferred assets | ||||||
All other assets | ||||||
Deferred income taxes | ||||||
Total assets (1) | $ | $ | ||||
LIABILITIES AND EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | $ | ||||
Short-term debt and current portion of long-term debt (1) | ||||||
Progress collections and deferred income | ||||||
All other current liabilities | ||||||
Total current liabilities | ||||||
Long-term debt | ||||||
Deferred income taxes | ||||||
Liabilities for pensions and other postretirement benefits | ||||||
All other liabilities | ||||||
Members' equity: | ||||||
Members' capital (common units 1,037 and 1,035 issued and outstanding as of June 30, 2019 and December 31, 2018, respectively) | ||||||
Retained loss | ( | ) | ( | ) | ||
Accumulated other comprehensive loss | ( | ) | ( | ) | ||
Baker Hughes, a GE company, LLC members' equity | ||||||
Noncontrolling interests | ||||||
Total equity | ||||||
Total liabilities and equity | $ | $ |
(1) | Total assets include $ |
(In millions, except per unit amounts) | Common Unitholders | Retained Earnings (Loss) | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total Equity | ||||||||||
Balance at December 31, 2018 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||
Comprehensive income (loss): | |||||||||||||||
Net income | |||||||||||||||
Other comprehensive income (loss) | ( | ) | |||||||||||||
Regular cash distribution to members ($0.36 per unit) | ( | ) | ( | ) | |||||||||||
Other transactions with members | ( | ) | ( | ) | |||||||||||
BHGE stock-based compensation cost | |||||||||||||||
Other | ( | ) | |||||||||||||
Balance at June 30, 2019 | $ | $ | ( | ) | $ | ( | ) | $ | $ |
(In millions, except per unit amounts) | Common Unitholders | Retained Loss | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total Equity | ||||||||||
Balance at March 31, 2019 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||
Comprehensive income (loss): | |||||||||||||||
Net income (loss) | ( | ) | ( | ) | |||||||||||
Other comprehensive loss | ( | ) | ( | ) | ( | ) | |||||||||
Regular cash distribution to members ($0.18 per unit) | ( | ) | ( | ) | |||||||||||
Other transactions with members | ( | ) | ( | ) | |||||||||||
BHGE stock-based compensation cost | |||||||||||||||
Other | ( | ) | |||||||||||||
Balance at June 30, 2019 | $ | $ | ( | ) | $ | ( | ) | $ | $ |
(In millions, except per unit amounts) | Common Unitholders | Retained Earnings (Loss) | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total Equity | ||||||||||
Balance at December 31, 2017 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||
Effect of adoption of ASU 2016-16 on taxes | |||||||||||||||
Comprehensive income (loss): | |||||||||||||||
Net income (loss) | ( | ) | ( | ) | |||||||||||
Other comprehensive loss | ( | ) | ( | ) | ( | ) | |||||||||
Regular cash distribution to members ($0.36 per unit) | ( | ) | ( | ) | |||||||||||
Repurchase and cancellation of common units | ( | ) | ( | ) | |||||||||||
BHGE stock-based compensation cost | |||||||||||||||
Other | ( | ) | ( | ) | |||||||||||
Balance at June 30, 2018 | $ | $ | ( | ) | $ | ( | ) | $ | $ |
(In millions, except per unit amounts) | Common Unitholders | Retained Loss | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total Equity | ||||||||||
Balance at March 31, 2018 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||
Comprehensive income (loss): | |||||||||||||||
Net income (loss) | ( | ) | ( | ) | |||||||||||
Other comprehensive loss | ( | ) | ( | ) | ( | ) | |||||||||
Regular cash distribution to members ($0.18 per unit) | ( | ) | ( | ) | |||||||||||
Repurchase and cancellation of common units | ( | ) | ( | ) | |||||||||||
BHGE stock-based compensation cost | |||||||||||||||
Other | ( | ) | ( | ) | |||||||||||
Balance at June 30, 2018 | $ | $ | ( | ) | $ | ( | ) | $ | $ |
Six Months Ended June 30, | ||||||
(In millions) | 2019 | 2018 | ||||
Cash flows from operating activities: | ||||||
Net income (loss) | $ | $ | ( | ) | ||
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | ||||||
Depreciation and amortization | ||||||
Valuation allowance on disposal group | ||||||
Benefit for deferred income taxes | ( | ) | ( | ) | ||
Changes in operating assets and liabilities: | ||||||
Current receivables | ( | ) | ( | ) | ||
Inventories | ( | ) | ( | ) | ||
Accounts payable | ||||||
Progress collections and deferred income | ( | ) | ||||
Contract and other deferred assets | ( | ) | ||||
Other operating items, net | ( | ) | ||||
Net cash flows from operating activities | ||||||
Cash flows from investing activities: | ||||||
Expenditures for capital assets | ( | ) | ( | ) | ||
Proceeds from disposal of assets | ||||||
Net cash paid for business interests | ( | ) | ||||
Other investing items, net | ( | ) | ||||
Net cash flows used in investing activities | ( | ) | ( | ) | ||
Cash flows from financing activities: | ||||||
Net repayments of short-term debt and other borrowings | ( | ) | ( | ) | ||
Repayment of long-term debt | ( | ) | ( | ) | ||
Distribution to members | ( | ) | ( | ) | ||
Repurchase of common units | ( | ) | ||||
Other financing items, net | ( | ) | ||||
Net cash flows used in financing activities | ( | ) | ( | ) | ||
Effect of currency exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | ||
Decrease in cash and cash equivalents | ( | ) | ( | ) | ||
Cash and cash equivalents, beginning of period | ||||||
Cash and cash equivalents, end of period | $ | $ | ||||
Supplemental cash flows disclosures: | ||||||
Income taxes paid | $ | $ | ||||
Interest paid | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
Total Revenue | 2019 | 2018 | 2019 | 2018 | ||||||||
U.S. | $ | $ | $ | $ | ||||||||
Non-U.S. | ||||||||||||
Total | $ | $ | $ | $ |
June 30, 2019 | December 31, 2018 | |||||
Customer receivables | $ | $ | ||||
Related parties | ||||||
Other | ||||||
Total current receivables | ||||||
Less: Allowance for doubtful accounts | ( | ) | ( | ) | ||
Total current receivables, net | $ | $ |
June 30, 2019 | December 31, 2018 | |||||
Finished goods | $ | $ | ||||
Work in process and raw material | ||||||
Total inventories, net | $ | $ |
Oilfield Services | Oilfield Equipment | Turbo-machinery & Process Solutions | Digital Solutions | Total | |||||||||||
Balance at December 31, 2017, gross | $ | $ | $ | $ | $ | ||||||||||
Accumulated impairment at December 31, 2017 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Balance at December 31, 2017 | |||||||||||||||
Purchase accounting adjustments (1) | ( | ) | |||||||||||||
Currency exchange and others | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||
Balance at December 31, 2018 | |||||||||||||||
Currency exchange and others | ( | ) | ( | ) | |||||||||||
Balance at June 30, 2019 | $ | $ | $ | $ | $ |
(1) | Includes the final determination of fair value of the assets and liabilities and the related goodwill associated with the acquisition of Baker Hughes that was concluded in the second quarter of 2018. Of the total goodwill of $ |
June 30, 2019 | December 31, 2018 | |||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | |||||||||||||
Customer relationships | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||
Technology | ( | ) | ( | ) | ||||||||||||||
Trade names and trademarks | ( | ) | ( | ) | ||||||||||||||
Capitalized software | ( | ) | ( | ) | ||||||||||||||
Other | ( | ) | ( | ) | ||||||||||||||
Finite-lived intangible assets | ( | ) | ( | ) | ||||||||||||||
Indefinite-lived intangible assets (1) | — | — | ||||||||||||||||
Total intangible assets | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ |
(1) | Indefinite-lived intangible assets are principally comprised of the Baker Hughes trade name. |
Year | Estimated Amortization Expense | ||
Remainder of 2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
2024 |
June 30, 2019 | December 31, 2018 | |||||
Long-term product service agreements | $ | $ | ||||
Long-term equipment contracts (1) | ||||||
Contract assets (total revenue in excess of billings) (2) | ||||||
Deferred inventory costs (3) | ||||||
Non-recurring engineering costs | ||||||
Contract and other deferred assets | $ | $ |
(1) | Reflects revenue earned in excess of billings on our long-term contracts to construct technically complex equipment and certain other service agreements. |
(2) | Contract assets (total revenue in excess of billings) were $ |
(3) | Deferred inventory costs were $ |
June 30, 2019 | December 31, 2018 | |||||
Progress collections | $ | $ | ||||
Deferred income | ||||||
Progress collections and deferred income (contract liabilities) (1) | $ | $ |
(1) | Progress collections and deferred income (contract liabilities) were $ |
Operating Lease Expense | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | ||||
Long-term fixed lease | $ | $ | ||||
Long-term variable lease | ||||||
Short-term lease (1) | ||||||
Total operating lease expense | $ | $ |
(1) | Includes leases with a term of one month or less |
Year | Operating Leases | ||
Remainder of 2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total lease payments | |||
Less: imputed interest | |||
Total | $ |
Operating Leases | |||
All other current liabilities | $ | ||
All other liabilities | |||
Total | $ |
June 30, 2019 | December 31, 2018 | |||||
Short-term borrowings | ||||||
Short-term borrowings from GE | $ | $ | ||||
Other borrowings | ||||||
Total short-term borrowings | ||||||
Long-term borrowings | ||||||
3.2% Senior Notes due August 2021 | ||||||
2.773% Senior Notes due December 2022 | ||||||
8.55% Debentures due June 2024 | ||||||
3.337% Senior Notes due December 2027 | ||||||
6.875% Notes due January 2029 | ||||||
5.125% Senior Notes due September 2040 | ||||||
4.08% Senior Notes due December 2047 | ||||||
Other long-term borrowings | ||||||
Total long-term borrowings | ||||||
Total borrowings | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
Service cost | $ | $ | $ | $ | ||||||||
Interest cost | ||||||||||||
Expected return on plan assets | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Amortization of net actuarial loss | ||||||||||||
Curtailment loss | ||||||||||||
Net periodic cost (benefit) | $ | $ | ( | ) | $ | $ | ( | ) |
Common Units Held by BHGE | Common Units Held by GE | |||
Balance at December 31, 2018 | ||||
Issue of units to BHGE under equity incentive plan | ||||
Balance at June 30, 2019 |
Investment Securities | Foreign Currency Translation Adjustments | Cash Flow Hedges | Benefit Plans | Accumulated Other Comprehensive Loss | |||||||||||
Balance at December 31, 2018 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Other comprehensive income (loss) before reclassifications | ( | ) | |||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | |||||||||||||||
Deferred taxes | |||||||||||||||
Other comprehensive income (loss) | ( | ) | |||||||||||||
Less: Other comprehensive loss attributable to noncontrolling interests | ( | ) | ( | ) | |||||||||||
Other adjustments | ( | ) | ( | ) | |||||||||||
Balance at June 30, 2019 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Investment Securities | Foreign Currency Translation Adjustments | Cash Flow Hedges | Benefit Plans | Accumulated Other Comprehensive Loss | |||||||||||
Balance at December 31, 2017 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||
Other comprehensive income (loss) before reclassifications | ( | ) | ( | ) | ( | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | |||||||||||||||
Deferred taxes | ( | ) | ( | ) | ( | ) | |||||||||
Other comprehensive income (loss) | ( | ) | ( | ) | ( | ) | |||||||||
Less: Other comprehensive loss attributable to noncontrolling interests | ( | ) | ( | ) | |||||||||||
Balance at June 30, 2018 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) |
June 30, 2019 | December 31, 2018 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Net Balance | Level 1 | Level 2 | Level 3 | Net Balance | |||||||||||||||||
Assets | ||||||||||||||||||||||||
Derivatives | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
Investment securities | ||||||||||||||||||||||||
Total assets | ||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Derivatives | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
Total liabilities | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) |
2019 | 2018 | |||||
Balance at January 1 | $ | $ | ||||
Purchases | ||||||
Proceeds at maturity | ( | ) | ( | ) | ||
Unrealized gains recognized in AOCI | ||||||
Balance at June 30 | $ | $ |
June 30, 2019 | December 31, 2018 | |||||||||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||
Investment securities | ||||||||||||||||||||||||
Non-U.S. debt securities (1) | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
Equity securities (2) | — | — | — | — | ||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ |
(1) | All of our investment securities are classified as available for sale instruments. Non-U.S. debt securities mature within |
(2) | Gains (losses) recorded to earnings related to these securities were $( |
June 30, 2019 | December 31, 2018 | |||||||||||
Assets | (Liabilities) | Assets | (Liabilities) | |||||||||
Derivatives accounted for as hedges | ||||||||||||
Currency exchange contracts | $ | $ | ( | ) | $ | $ | ( | ) | ||||
Derivatives not accounted for as hedges | ||||||||||||
Currency exchange contracts | ( | ) | ( | ) | ||||||||
Other derivatives | ||||||||||||
Total derivatives | $ | $ | ( | ) | $ | $ | ( | ) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
Gain (Loss) Recognized in AOCI | Gain (Loss) Reclassified from AOCI to Earnings | Gain (Loss) Recognized in AOCI | Gain (Loss) Reclassified from AOCI to Earnings | |||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||
Currency exchange contracts | $ | ( | ) | $ | ( | ) | $ | $ | $ | $ | $ | $ |
Derivatives not designated as hedging instruments | Condensed consolidated statement of income caption | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||
Currency exchange contracts (1) | Cost of goods sold | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||
Currency exchange contracts | Selling, general and administrative expenses | ( | ) | ( | ) | ||||||||
Commodity derivatives | Cost of goods sold | ( | ) | ||||||||||
Other derivatives | Other non operating income (loss), net | ||||||||||||
Total (2) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ |
(1) | Excludes gains on embedded derivatives of $ |
(2) | The effect on earnings of derivatives not designated as hedges is substantially offset by change in fair value of the economically hedged items in the current and future periods. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
Segments revenue | 2019 | 2018 | 2019 | 2018 | ||||||||
Oilfield Services | $ | $ | $ | $ | ||||||||
Oilfield Equipment | ||||||||||||
Turbomachinery & Process Solutions | ||||||||||||
Digital Solutions | ||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
Segment income (loss) before income taxes | 2019 | 2018 | 2019 | 2018 | ||||||||
Oilfield Services | $ | $ | $ | $ | ||||||||
Oilfield Equipment | ( | ) | ( | ) | ||||||||
Turbomachinery & Process Solutions | ||||||||||||
Digital Solutions | ||||||||||||
Total segment | ||||||||||||
Corporate | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Inventory impairments (1) | ( | ) | ( | ) | ||||||||
Restructuring, impairment and other | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Separation and merger related costs | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Other non operating income (loss), net | ( | ) | ( | ) | ||||||||
Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Total | $ | $ | $ | $ | ( | ) |
(1) | Charges for inventory impairments are reported in the "Cost of goods sold" caption of the condensed consolidated statements of income (loss). |
2019 | 2018 | |||||
Balance at January 1 | $ | $ | ||||
Provisions | ||||||
Expenditures | ( | ) | ( | ) | ||
Other (1) | ( | ) | ||||
Balance at June 30 | $ | $ |
(1) | 2018 amount is primarily related to the acquisition of Baker Hughes. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
Oilfield Services | $ | $ | $ | $ | ||||||||
Oilfield Equipment | ||||||||||||
Turbomachinery & Process Solutions | ||||||||||||
Digital Solutions | ||||||||||||
Corporate | ||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
Property, plant & equipment, net | $ | $ | $ | $ | ||||||||
Employee-related termination expenses | ||||||||||||
Asset relocation costs | ||||||||||||
Environmental remediation costs | ||||||||||||
Contract termination fees | ||||||||||||
Other incremental costs | ||||||||||||
Total | $ | $ | $ | $ |
Assets and liabilities of business held for sale | June 30, 2019 | ||
Assets | |||
Current receivables | $ | ||
Inventories | |||
Property, plant and equipment | |||
Goodwill | |||
Other intangible assets | |||
Valuation allowance on disposal group classified as held for sale (1) | ( | ) | |
Other assets | |||
Total assets of business held for sale | |||
Liabilities | |||
Accounts payable | ( | ) | |
All other liabilities | ( | ) | |
Total liabilities of business held for sale | ( | ) | |
Total net assets of business held for sale | $ |
(1) | Valuation allowance on disposal group classified as held for sale is recorded in Other non operating income (loss), net in our condensed consolidated statements of income (loss) and includes costs associated with selling the business of $ |
• | North America onshore activity: in the second quarter of 2019, we experienced a decline in the rig count, as compared to the second quarter of 2018. We expect that in the short-term, North American onshore activity |
• | International onshore activity: we have seen an increase in rig count activity in the second quarter of 2019 and expect this growth to continue for the remainder of the year, albeit at a slower rate. We have seen signs of improvement with the increase in commodity prices during the quarter, but due to continued volatility, we remain cautious as to growth expectations. |
• | Offshore projects: we have begun to see increasing customer activity on offshore projects and more final investment decisions being made. Subsea tree awards increased in 2018 and we expect subsea awards to be roughly flat in 2019, though still at levels well below prior 2012 & 2013 peaks. We expect customers to continue to evaluate the timing of final investment decisions, and in light of increased commodity price volatility, there may be some project delays. |
• | Liquefied Natural Gas (LNG) projects: while currently oversupplied, we believe a significant number of final investment decisions are needed to fill the projected supply-demand imbalance in the early to middle part of the next decade. Within the first half of 2019, we have seen multiple large-scale LNG projects reach a positive final investment decision. We continue to view the long-term economics of the LNG industry as positive given our outlook for supply and demand. |
• | Refinery, petrochemical and industrial projects: in refining, we believe large, complex refineries should gain advantage in a more competitive, oversupplied landscape in 2019 as the industry globalizes and refiners position to meet local demand and secure export potential. In petrochemicals, we continue to see healthy demand and cost-advantaged supply driving projects forward in 2019. The industrial market continues to grow as outdated infrastructure is replaced, policy changes come into effect and power is decentralized. We continue to see growing demand across these markets in 2019. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
Brent oil price ($/Bbl) (1) | $ | 69.04 | $ | 74.53 | $ | 66.07 | $ | 70.67 | ||||
WTI oil price ($/Bbl) (2) | 59.88 | 68.07 | 57.39 | 65.55 | ||||||||
Natural gas price ($/mmBtu) (3) | 2.57 | 2.85 | 2.74 | 2.96 |
(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 June 30, | Six Months Ended June 30, | |||||||||||
2019 | 2018 | % Change | 2019 | 2018 | % Change | |||||||
North America | 1,071 | 1,147 | (7 | )% | 1,149 | 1,191 | (4 | )% | ||||
International | 1,109 | 968 | 15 | % | 1,069 | 969 | 10 | % | ||||
Worldwide | 2,180 | 2,115 | 3 | % | 2,218 | 2,160 | 3 | % |
Three Months Ended June 30, | $ Change | Six Months Ended June 30, | $ Change | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||
Revenue: | ||||||||||||||||||
Oilfield Services | $ | 3,263 | $ | 2,884 | $ | 379 | $ | 6,249 | $ | 5,562 | $ | 687 | ||||||
Oilfield Equipment | 693 | 617 | 77 | 1,428 | 1,281 | 147 | ||||||||||||
Turbomachinery & Process Solutions | 1,405 | 1,385 | 20 | 2,707 | 2,845 | (138 | ) | |||||||||||
Digital Solutions | 632 | 662 | (30 | ) | 1,224 | 1,260 | (36 | ) | ||||||||||
Total | $ | 5,994 | $ | 5,548 | $ | 446 | $ | 11,608 | $ | 10,947 | $ | 661 |
Three Months Ended June 30, | $ Change | Six Months Ended June 30, | $ Change | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||
Segment operating income (loss): | ||||||||||||||||||
Oilfield Services | $ | 233 | $ | 189 | $ | 44 | $ | 409 | $ | 330 | $ | 79 | ||||||
Oilfield Equipment | 14 | (12 | ) | 26 | 26 | (18 | ) | 44 | ||||||||||
Turbomachinery & Process Solutions | 135 | 113 | 22 | 253 | 232 | 21 | ||||||||||||
Digital Solutions | 84 | 96 | (12 | ) | 152 | 169 | (17 | ) | ||||||||||
Total segment operating income | 466 | 387 | 79 | 839 | 714 | 125 | ||||||||||||
Corporate | (105 | ) | (98 | ) | (7 | ) | (205 | ) | (196 | ) | (9 | ) | ||||||
Inventory impairment | — | (15 | ) | 15 | — | (76 | ) | 76 | ||||||||||
Restructuring, impairment and other | (50 | ) | (146 | ) | 96 | (112 | ) | (308 | ) | 196 | ||||||||
Separation and merger related costs | (40 | ) | (50 | ) | 10 | (74 | ) | (96 | ) | 22 | ||||||||
Operating income | 271 | 78 | 193 | 447 | 37 | 410 | ||||||||||||
Other non operating income (loss), net | (131 | ) | 43 | (174 | ) | (110 | ) | 45 | (155 | ) | ||||||||
Interest expense, net | (56 | ) | (63 | ) | 7 | (115 | ) | (109 | ) | (6 | ) | |||||||
Income (loss) before income taxes and equity in loss of affiliate | 84 | 58 | 26 | 222 | (27 | ) | 249 | |||||||||||
Equity in loss of affiliate | — | (34 | ) | 34 | — | (54 | ) | 54 | ||||||||||
Provision for income taxes | (95 | ) | (62 | ) | (33 | ) | (162 | ) | (100 | ) | (62 | ) | ||||||
Net income (loss) | $ | (11 | ) | $ | (38 | ) | $ | 27 | $ | 60 | $ | (181 | ) | $ | 241 |
(In millions) | 2019 | 2018 | ||||
Operating activities | $ | 456 | $ | 426 | ||
Investing activities | (563 | ) | (162 | ) | ||
Financing activities | (428 | ) | (2,381 | ) |
i. | Provision of certain transition services by each of BHGE LLC and GE, including providing for the development and use of certain service related intellectual property at the end of the transition period and the management of certain data and information for future business needs; |
ii. | Sale of certain digital business assets of BHGE to GE for a closing consideration of $50 million, subject to customary closing conditions and regulatory approvals; |
iii. | Modification of certain sales arrangements between the parties and the ability of each party to directly market offerings of its digital business to customers in the oil and gas industry; |
iv. | Research and development efforts and the purchase of products and services related to aero-derivative turbines; |
v. | Supply and distribution terms for certain trailer-mounted gas turbine generator-based engine units and related parts and services; and |
vi. | Scheduled repayment by BHGE to GE of the previously disclosed promissory note net of certain costs and tax adjustments. |
101.INS* | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
101.SCH* | XBRL Schema Document | |
101.CAL* | XBRL Calculation Linkbase Document | |
101.LAB* | XBRL Label Linkbase Document | |
101.PRE* | XBRL Presentation Linkbase Document | |
101.DEF* | XBRL Definition Linkbase Document |
Baker Hughes, a GE company, LLC (Registrant) | |||
Date: | July 31, 2019 | By: | /s/ BRIAN WORRELL |
Brian Worrell | |||
Chief Financial Officer | |||
Date: | July 31, 2019 | By: | /s/ KURT CAMILLERI |
Kurt Camilleri | |||
Vice President, Controller and Chief Accounting Officer |
Section 1.01. | Definitions | 1 |
Section 2.01. | Specified Unsettled Amounts. | 3 | |
Employee Transfers | 3 | ||
Aeroderivative Matters | 5 | ||
Algesco | 5 | ||
Joint Ventures | 5 | ||
PwC Tax Agreement | 5 | ||
Exchange Agreement | 6 | ||
Transition Service Agreement Schedules | 6 | ||
Installed Base Matters | 6 | ||
Additional Agreements | 7 |
Representations and Warranties | 9 | ||
Payments | 9 | ||
Notices | 9 | ||
Interpretations | 10 | ||
Governing Law; Jurisdiction; Specific Performance | 11 | ||
Counterparts; Electronic Transmission of Signatures | 11 | ||
Assignment; No Third-Party Beneficiaries | 12 | ||
Expenses | 12 | ||
Severability | 12 | ||
Entire Agreement | 12 | ||
Amendment | 12 | ||
Waiver | 12 |
SCHEDULE AND EXHIBITS | |
Schedule 2.01(c)(i) | Specified Unsettled Amounts |
Schedule 2.01(c)(ii) | Receivables Management Plan |
Schedule 2.02(a) | Employee Transfers |
Schedule 2.03 | LM6000 Matters |
Schedule 2.04 | Algesco |
Schedule 2.05(a) | Joint Venture |
Schedule 2.05(b) | Joint Venture Acknowledgments and Agreements |
Exhibit A | Form of Transition Services Agreement |
Exhibit B | Form of Second Amendment and Restatement of Promissory Note |
Exhibit C | Form of Amendment to Amended and Restated Intercompany Services Agreement |
Exhibit D | Form of Amendment to the Amended and Restated Intellectual Property Cross License Agreement |
Exhibit E | Form of A&R MPSA Amendment |
Exhibit F | Form of GE Digital Asset Purchase Agreement |
Exhibit G | Form of GED Referral Agreement |
Exhibit H | Form of Agreement for the Supply of TM2500 Aeroderivative Units |
Exhibit I | Form of Purchase Order Modification Agreement |
Exhibit J | Form of Bridge STDA |
Exhibit K | Form of Side Letter to the STDAs |
Exhibit L | Form of Joint Ownership Agreement |
Exhibit M | Form of Litigation Hold Letter |
Exhibit N | Form of Poland Side Letter |
Exhibit O | Form of Amendment to the A&R Registration Rights Agreement |
Exhibit P | Form of Amendment to the GE Global Employee Services Agreement |
Definition | Defined in |
A&R ISA | Section 2.10(c) |
A&R MPSA Amendment | Section 2.10(e) |
A&R Registration Rights Agreement | Section 2.10(o) |
Agreement | Preamble |
Annex Note | Section 2.10(b) |
BHGE | Preamble |
BHGE Installed Base | Section 2.09(b) |
BHGE Unsettled Amounts | Section 2.01(a) |
BHGE LLC | Preamble |
BHGE LM6000 Releasors | Section 2.03 |
BHGE PwC Agreement Releasees | Section 2.06 |
BHI | Recitals |
Bridge STDA | Section 2.10(j) |
China Transfer | Section 2.02(a) |
GE | Preamble |
GE LM6000 Releasees | Section 2.03 |
GE PwC Agreement Releasees | Section 2.06 |
GE PwC Agreement Releasors | Section 2.06 |
GED Referral Agreement | Section 2.10(g) |
GE Unsettled Amounts | Section 2.01(b) |
IB Services | Section 2.09(d) |
Installed Base Readiness Designees | Section 2.09(a) |
Hungary Transfer | Section 2.02(a) |
JV Side Letter | Section 2.05(a) |
Definition | Defined in |
Litigation Hold Letter | Section 2.10(m) |
Master Agreement | Recitals |
Party | Preamble |
Poland Side Letter | Section 2.10(n) |
Poland Transfer | Section 2.02(a) |
PwC Agreements | Section 2.06 |
Replacement IBAT Tool | Section 2.09(b) |
Specified Employee Assets | Section 2.02(a) |
Specified Transferred Employees | Section 2.02(a) |
Specified Unsettled Amounts | Section 2.01(b) |
Transaction Agreement | Recitals |
Transaction Documents | Section 3.08 |
Transactions | Recitals |
Transfer Costs | Section 2.02(a) |
Transfer Taxes | Section 2.02(b) |
Transition Services Agreement | Section 2.10(a) |
GENERAL ELECTRIC COMPANY | ||
By: | /s/ John Godsman | |
Name: John Godsman | ||
Title: Vice President | ||
BAKER HUGHES, A GE COMPANY | ||
By: | /s/ Lee Whitley | |
Name: Lee Whitley | ||
Title: Corporate Secretary | ||
BAKER HUGHES, A GE COMPANY, LLC | ||
By: | /s/ Lee Whitley | |
Name: Lee Whitley | ||
Title: Corporate Secretary |
1. | Effective Date of the A&R IPXL. The definition of the term “Effective Date” in Section 1.01 of the A&R IPXL is hereby deleted in its entirety and replaced with the following: |
2. | This Letter Agreement is Effective as of the Date Hereof. This letter agreement, including the amendment set forth in Paragraph 1 above, is immediately effective as of the date hereof. |
3. | Relationship to the A&R IPXL. This letter agreement is supplemental to the A&R IPXL and incorporates the terms of Sections 6.05-6.14 thereof by reference (which terms shall be treated as if they are currently in effect for the purposes of this letter agreement); provided, however, to the extent of any conflict between this letter agreement and the A&R IPXL, this letter agreement shall control. Wherever the A&R IPXL is referred to therein, such reference shall be to the A&R IPXL as amended hereby. Except as set forth herein, all terms and conditions of the A&R IPXL remain unchanged and in full force and effect. |
By | /s/ Lee Whitley Name: Lee Whitley Title: Corporate Secretary |
By | /s/ John Godsman Name: John Godsman Title: Vice President |
Article I | |||
DEFINITIONS | |||
Section 1.1 | Certain Defined Terms | 1 | |
Section 1.2 | Definitions | 8 | |
Article II | |||
PURCHASE AND SALE | |||
Section 2.1 | Purchase and Sale of Assets | 9 | |
Section 2.2 | Assumption and Exclusion of Liabilities | 11 | |
Section 2.3 | Purchase Price and Allocation | 11 | |
Section 2.4 | Closing | 12 | |
Section 2.5 | Closing Deliveries | 12 | |
Section 2.6 | Non-Assignment; Consents | 13 | |
Article III | |||
REPRESENTATIONS AND WARRANTIES OF THE SELLER | |||
Section 3.1 | Organization and Authority of the Seller | 15 | |
Section 3.2 | No Conflict | 15 | |
Section 3.3 | Governmental Consents and Approvals | 15 | |
Section 3.4 | Backlog | 16 | |
Section 3.5 | Conduct in the Ordinary Course | 16 | |
Section 3.6 | Litigation | 16 | |
Section 3.7 | Compliance with Laws; Permits; Anti-Bribery and Anti-Money Laundering Compliance | 16 | |
Section 3.8 | Intellectual Property. | 17 | |
Section 3.9 | Taxes | 18 | |
Section 3.10 | Transferred Contracts | 19 | |
Section 3.11 | Employee Benefit Plans and Labor Matters | 20 | |
Section 3.12 | Affiliate Transactions | 21 | |
Section 3.13 | Insurance | 21 | |
Section 3.14 | Trade Compliance | 22 | |
Section 3.15 | Brokers | 22 | |
Section 3.16 | Waiver and Release | 22 | |
Section 3.17 | Exclusivity of Representations and Warranties | 22 | |
Article IV | |||
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER | |||
Section 4.1 | Organization and Authority of the Purchaser | 23 | |
Section 4.2 | No Conflict | 23 |
Section 4.3 | Governmental Consents and Approvals | 24 | |
Section 4.4 | Brokers | 24 | |
Section 4.5 | Litigation | 24 | |
Section 4.6 | No Other Representations | 24 | |
Article V | |||
ADDITIONAL AGREEMENTS | |||
Section 5.1 | Conduct of Business Prior to the Closing | 24 | |
Section 5.2 | Antitrust Notifications and Other Regulatory Approvals | 26 | |
Section 5.3 | Access to Information | 26 | |
Section 5.4 | Notifications | 27 | |
Section 5.5 | Customer Communication Efforts | 27 | |
Section 5.6 | Employee Matters | 28 | |
Section 5.7 | Further Action; Misdirected Funds and Correspondence; Misallocated Assets | 28 | |
Section 5.8 | Transferred Contracts Schedule | 29 | |
Section 5.9 | Missing Documents | 30 | |
Section 5.10 | Consents | 30 | |
Section 5.11 | Tax Cooperation and Exchange of Information | 30 | |
Section 5.12 | Straddle Periods | 31 | |
Section 5.13 | Conveyance Taxes | 31 | |
Section 5.14 | Refunds | 31 | |
Section 5.15 | Tax Treatment | 32 | |
Section 5.16 | Intellectual Property Licenses | 32 | |
Section 5.17 | Website Redirection | 33 | |
Section 5.18 | Bulk Transfer Laws | 33 | |
Section 5.19 | Non-Solicitation | 33 | |
Section 5.20 | Public Announcements | 33 | |
Section 5.21 | Waiver and Release | 33 | |
Article VI | |||
CONDITIONS TO CLOSING | |||
Section 6.1 | Conditions to Obligations of the Seller | 34 | |
Section 6.2 | Conditions to Obligations of the Purchaser | 35 | |
Article VII | |||
INDEMNIFICATION | |||
Section 7.1 | Survival of Representations, Warranties, Covenants and Agreements | 36 | |
Section 7.2 | Indemnification by the Seller | 36 | |
Section 7.3 | Indemnification by the Purchaser | 36 | |
Section 7.4 | Limits on Indemnification | 37 | |
Section 7.5 | Notice of Loss; Third-Party Claims | 38 | |
Section 7.6 | Set-Off | 39 | |
Section 7.7 | Tax Treatment | 39 |
Section 7.8 | Exclusive Remedy | 39 | |
Article VIII | |||
TERMINATION | |||
Section 8.1 | Termination | 39 | |
Section 8.2 | Effect of Termination | 40 | |
Article IX | |||
GENERAL PROVISIONS | |||
Section 9.1 | Payments | 40 | |
Section 9.2 | Independent Contractors | 41 | |
Section 9.3 | Confidentiality | 41 | |
Section 9.4 | Further Assurances | 42 | |
Section 9.5 | Notices | 42 | |
Section 9.6 | Entire Agreement | 43 | |
Section 9.7 | No Third-Party Beneficiaries | 43 | |
Section 9.8 | Amendment; Waiver | 43 | |
Section 9.9 | Governing Law | 43 | |
Section 9.10 | Waiver of Jury Trial | 44 | |
Section 9.11 | Counterparts; Electronic Transmission of Signatures | 44 | |
Section 9.12 | Assignment | 44 | |
Section 9.13 | Rules of Construction | 44 | |
Section 9.14 | Non-Recourse | 45 | |
Section 9.15 | Expenses | 45 | |
Section 9.16 | Severability | 45 | |
Section 9.17 | Specific Performance | 45 |
Definition | Location |
“A&R MPSA” | Recitals |
“A&R MPSA Amendment” | Recitals |
“Agreement” | Preamble |
“Amended A&R MPSA” | Recitals |
“Approvals” | 2.6(a) |
Definition | Location |
“Assignment and Assumption Agreement” | 2.5(a)(ii) |
“Assumed Liabilities” | 2.2(a) |
“Assumed Employee Liabilities” | 2.2(a)(iv) |
“Backlog” | 3.4(a) |
“Bill of Sale” | 2.5(a)(i) |
“Closing” | 2.4 |
“Closing Date” | 2.4 |
“Confidential Information” | 9.3(a) |
“Communications Plan” | 5.5 |
“Deductible” | 7.4(b) |
“Delayed Contract” | 2.6(b) |
“Excluded Assets” | 2.1(b) |
“Excluded Liabilities” | 2.2(b) |
“Indemnification Period” | 7.1(a) |
“Joint Customer Notice” | 5.5 |
“Money Laundering Laws” | 3.7(d) |
“Outside Date” | 8.1(a) |
“Permits” | 3.7(b) |
“Proceeding” | 7.5 |
“Purchase Price” | 2.3(a) |
“Purchased Assets” | 2.1(a) |
“Purchaser” | Preamble |
“Purchaser Fundamental Representations” | 1.1 |
“Purchaser Indemnified Party” | 7.2 |
“Purchaser Representation” | Article IV |
“Referral Agreement” | Recitals |
“Restricted Period” | 5.19(a) |
“Sale” | 2.4 |
“Seller” | Preamble |
“Seller Bank Account” | 9.1 |
“Seller Fundamental Representations” | 1.1 |
“Seller Indemnified Party” | 7.3 |
“Seller Representation” | Article III |
“Shared Contract” | 2.6(b) |
“Third-Party Claim” | 7.5 |
“Third-Party Consent” | 5.10 |
“Third-Party Warranty Rights” | 2.1(a)(vii) |
“Transferred Contracts” | 2.1(a)(i) |
“Transferred Intellectual Property” | 2.1(a)(vi) |
“Transferred Records” | 2.1(a)(iii) |
By: | /s/ Lee Whitley Name: Lee Whitley Title: Corporate Secretary |
By: | /s/ Katherine Butler Name: Katherine Butler Title: General Counsel |
1. | Amendments. The Amended and Restated Agreement is hereby amended as follows: |
(a) | The fourth paragraph of the recitals to the Amended and Restated Agreement is hereby deleted in its entirety; |
(b) | With effect from and after the Amendment Effective Date, Sections 2.01, 2.08 and 4.08(c) are each deleted in their entirety and replaced with the following: |
(c) | With effect from and after the Amendment Effective Date, other than to the extent applicable to the fulfillment of obligations that either Party or any of their respective Affiliates have agreed to with respect to Orders or Statements of Work (i) in effect as of the Amendment Effective Date under the Amended and Restated Agreement for the direct or indirect provision of GE Digital Offerings to Baker Hughes Customers (“Existing Customer Contracts”) or (ii) which are entered into pursuant to an open dual-scope contract offer to a customer listed on Section 5.1(b)(iii) of the Disclosure Schedule to the Purchase Agreement (“Permitted Dual-Scope Contracts”, and, together with the |
(d) | Section 9.03 to the Amended and Restated Agreement is hereby deleted in its entirety and replaced with Schedule A to this Amendment; |
(e) | The following is hereby added as a new subsection (c) to Section 8.05 of the Amended and Restated Agreement: |
(f) | With effect from and after the Amendment Effective Date, Section 10.04 is deleted in its entirety and replaced with the following: |
2. | Non-Exclusive Relationship. Notwithstanding anything to the contrary in the Amended and Restated Agreement or any other agreement between the Parties or any of their respective Affiliates, from and after the Amendment Effective Date, neither Party nor any of its Affiliates shall be bound by any exclusivity, non-compete, channel allocation obligations or any other restrictive covenants with respect to the other Party or any of its Affiliates, in each case in connection with any current or future Software offerings or related products (including, for the avoidance of doubt, computer middleware, firmware, gateways and routers) or services (collectively, “Digital Offerings”) and, for the avoidance of doubt, each Party and its Affiliates shall be entitled to work with any Person in connection with Digital Offerings and otherwise sell Digital Offerings into any and all channels and both Parties shall have unfettered access to sell or otherwise provide Digital Offerings to customers in the oil and gas industry (the “O&G Channel”); provided that, except as authorized by a Continuing Contract or with GE Digital's prior written consent (which may be granted or withheld in its sole discretion), Baker Hughes shall not resell any GE Digital Offerings other than in the O&G Channel. |
3. | Other Agreements. Notwithstanding anything in the Amended and Restated Agreement to the contrary, the Parties acknowledge and agree as follows: |
(a) | Other than with respect to Historian and Proficy or pursuant to a Permitted Dual-Scope Contract, from and after the Amendment Effective Date, no Orders or Statements of Work for GE Digital Offerings shall be entered into by the Parties or any of their respective Affiliates under the Amended and Restated Agreement and neither Party nor any of its Affiliates shall have any obligation to enter into any such Orders or Statements of Work. From and after the Amendment Effective Date, pricing for Historian and Proficy will be determined and agreed upon on a case-by-case basis, provided that for the twelve (12) month period immediately following the Amendment Effective Date, pricing for Historian and Proficy will be determined in accordance with Section 4 of Schedule 7.02(a) of the Amended and Restated Agreement. For the avoidance of doubt, the current standard list price for Historian and Proficy is set forth on Schedule C to this Amendment. |
(b) | All Continuing Contracts, including any licenses granted by GE Digital to Baker Hughes and/or Baker Hughes Customers thereunder or under the Amended and Restated Agreement with respect thereto, shall continue in accordance with, and be governed by, the Amended and Restated Agreement and their applicable terms and conditions (it being understood that, notwithstanding the foregoing, the terms and conditions applicable to BP shall be governed by the terms and conditions set forth on Schedule B to this Amendment); provided that the foregoing shall not apply to any contracts assigned to GE Digital pursuant to the Purchase Agreement. For the avoidance of doubt, this Amendment shall not terminate, expand, restrict or otherwise modify the duration, scope or term of any licenses granted between the Parties with respect to subject matter outside the scope of the Amended and Restated Agreement. For avoidance of doubt, all Continuing Services, excluding the Continuing Contracts, are terminated as of the Amendment Effective Date, except as otherwise covered under that certain Transition Services Agreement dated as of the date hereof, between an Affiliate of GE Digital and Baker Hughes (as amended, modified or supplemented from time to time in accordance with its terms). |
4. | General Terms. |
(a) | The Parties shall reasonably cooperate to avoid market confusion in the O&G Channel with respect to Digital Offerings and shall agree on appropriate external messaging in the O&G Channel regarding the relationship between the Parties. For the avoidance of doubt, there shall be no public announcements issued in connection with the execution of this Amendment. |
(b) | Each Party shall bear its own costs and expenses incurred in connection with the negotiation of this Amendment. |
(c) | For the avoidance of doubt, nothing in this Amendment shall impact the ongoing discussions between the Parties related to rooftop consolidation timelines. |
(d) | From and after the date of this Amendment, any reference in the Amended and Restated Agreement to “hereof”, “herein”, “hereby”, “hereto”, “this Agreement” and derivative or similar words shall be deemed a reference to the Amended and Restated Agreement as amended by this Amendment. |
(e) | In order to implement the amendments made in Section 1 of this Amendment, all references or other uses in the Amended and Restated Agreement to the sections deleted in accordance with Section 1 of this Amendment shall be accordingly deleted. Except as otherwise provided herein, the Amended and Restated Agreement shall remain unchanged and in full force and effect. In the event of any conflict or inconsistency between the terms and conditions of this Amendment and the terms and conditions of the Amended and Restated Agreement, the terms and conditions of this Amendment shall prevail. |
(f) | This Amendment and any disputes (whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall in all respects be governed by, and construed in accordance with, the Laws of the State of New York, including all matters of construction, validity and performance, in each case without reference to any conflict of Law rules that might lead to the application of the Laws of any other jurisdiction. |
(g) | Each Party covenants and agrees that, without any additional consideration, it shall execute and deliver any further legal instruments and perform any acts that are or may become necessary to effectuate this Amendment. |
(h) | This Amendment may be executed in any number of counterparts and by different Parties in separate counterparts, and delivered by means of electronic mail transmission or otherwise, each of which when so executed and delivered shall be deemed to be an original and all of which when taken together shall constitute one and the same amendment. |
By: | /s/ Katherine Butler Name: Katherine Butler Title: General Counsel |
By: | /s/ Lee Whitley Name: Lee Whitley Title: Corporate Secretary |
a. | All deal registrations need to adhere to GE Digital Deal Registration Guidelines, which are available on the partner portal referenced above. Key points include: |
• | Clear budget, authority, need and timing from end-customer. |
• | Referral Partner is expected to regularly update GED on the status of an approved opportunity, once every thirty (30) days at a minimum. If no update is provided for a period of sixty (60) days, GED may close the opportunity if Referral Partner does not provide an update to GED within ten (10) business days following GED’s written request. |
• | Referral Partner may register opportunities for end-customers in any regions where they are contracted to sell. |
• | Except as otherwise set forth in this Agreement, an approved deal registration will be valid for one-hundred-eighty (180) days. During the period in which an |
• | Any disagreement on the outcome of deal registration will be decided in accordance with the dispute resolution procedures set forth in Section 13 of this Agreement. |
b. | After submission of a deal registration, Referral Partner will receive a confirmation email that confirms GED has received and is reviewing the opportunity. GED will conduct a review to determine whether: |
• | The opportunity has been completed with all required information. |
• | Another channel partner has already engaged with the opportunity. |
• | A direct seller of GED or its Affiliates is already engaged with the opportunity. |
• | The opportunity aligns with GED product and sales strategy. |
c. | The terms of Exhibit 1 (Referral Commercial Terms) will additionally apply, and those terms will govern the Registered Opportunity for referral in the event of any conflict with the body of this Agreement. |
3. | Termination of Registered Opportunity. |
a. | Each Registered Opportunity will remain a Registered Opportunity until terminated upon the earliest of the following events: |
i. | GE Digital gives written notice to Referral Partner that it withdraws from working on the Registered Opportunity; |
ii. | GE Digital gives written notice to Referral Partner that the Registered Opportunity has been won and a contract signed with the end-customer, which written notice shall be provided reasonably promptly following the closing of the Registered Opportunity with the end-customer; |
iii. | both Parties agree in writing to remove the Registered Opportunity; |
iv. | the opportunity has remained an open Registered Opportunity for more than one-hundred-eighty (180) calendar days from the date registration became effective, unless both Parties mutually agree in writing to maintain its status as a Registered Opportunity; or |
v. | GE Digital does not contact the applicable end-customer within thirty (30) days following approval of a Registered Opportunity, after which BHGE may provide GE Digital with written notice of its intent to terminate the applicable Registered Opportunity due to such failure to contact the end-customer, which Registered Opportunity shall terminate if GE Digital does not subsequently contact such end-customer within ten (10) business days following receipt of such written notice from BHGE. |
b. | From and after the termination of a Registered Opportunity in accordance with this Section 3 (other than pursuant to Section 3(a)(ii)), BHGE may pursue the Registered Opportunity directly or refer it to other third parties and, unless otherwise agreed by the Parties (including with respect to any applicable referral fees), GED shall not pursue the Registered Opportunity or related opportunity with the same end-customer for a period of one-hundred and eighty (180) days. |
a. | GE Digital shall, at GE Digital’s expense, indemnify, defend or, at GE Digital’s option, settle any claim brought against Referral Partner relating to or arising out of GE Digital’s sales efforts in connection with any Registered Opportunity or the terms and conditions of any definitive agreement entered into with an end-customer pursuant to a Registered Opportunity (each such claim, a “Referral Partner Claim”), and pay any final judgments awarded by a court of competent jurisdiction or settlements entered into by GE Digital on Referral Partner’s behalf. Referral Partner must notify GE Digital promptly of the applicable Referral Partner Claim in writing, tender to GE Digital sole control and authority over the defense or settlement of such Referral Partner Claim, and reasonably cooperate with GE Digital, at GE Digital’s expense, and provide GE Digital with available information in the investigation and defense of such Referral Partner Claim. Any effort by Referral Partner to settle a Referral Partner Claim without GE Digital’s involvement and written approval shall void any indemnification obligation hereunder. |
b. | Referral Partner shall, at Referral Partner’s expense, indemnify, defend or, at Referral Partner’s option, settle any claim brought against GE Digital relating to or arising out of Referral Partner’s sales efforts in connection with any Registered Opportunity or any agreement entered into between Referral Partner and a third party in connection with such sales efforts (each such claim, a “GE Digital Claim”), and pay any final judgments awarded by a court of competent jurisdiction or settlements entered into by Referral Partner on GE Digital's behalf. GE Digital must notify Referral Partner promptly of the applicable GE Digital Claim in writing, tender to Referral Partner sole control and authority over the defense or settlement of such GE Digital Claim, and reasonably cooperate with Referral Partner, at Referral Partner’s expense, and provide Referral Partner with available information in the investigation and defense of such GE Digital Claim. Any effort by GE Digital to settle a GE Digital Claim without Referral Partner’s involvement and written approval shall void any indemnification obligation hereunder. |
Article I | DEFINITIONS | 1 | |
Section 1.01 | Certain Defined Terms | 1 | |
Article II | TERM AND TERMINATION | 7 | |
Section 2.01 | Term | 7 | |
Section 2.02 | Termination Events | 7 | |
Section 2.03 | Effect of Termination or Expiration of the Term | 9 | |
Section 2.04 | Survival | 9 | |
Article III | SCOPE OF SUPPLY | 9 | |
Article IV | EXCLUSIVITY | 9 | |
Section 4.01 | Exclusive Distribution | 9 | |
Section 4.02 | Exclusive Supply | 10 | |
Section 4.03 | Termination of Exclusivity | 11 | |
Article V | PURCHASE ORDERS | 12 | |
Section 5.01 | Outstanding POs at Closing | 12 | |
Section 5.02 | PO Contents | 12 | |
Section 5.03 | Modifications and Scheduling POs | 13 | |
Section 5.04 | Acceptance of POs | 13 | |
Article VI | TERMS & CONDITIONS OF PURCHASE | 14 | |
Section 6.01 | Terms & Conditions of Purchase | 14 | |
Article VII | OTHER AGREEMENTS | 14 | |
Section 7.01 | Support | 14 | |
Section 7.02 | No Discrimination | 15 | |
Section 7.03 | Sales Referrals | 15 | |
Section 7.04 | Product Quality Requirements | 15 | |
Section 7.05 | Project Execution Management | 15 | |
Section 7.06 | List of Auxiliary Component Suppliers | 15 | |
Section 7.07 | Branding of Product | 15 | |
Article VIII | ALLOCATION OF LIABILITY | 15 | |
Article IX | PRICING, PAYMENT TERMS AND INVOICING | 16 | |
Section 9.01 | Pricing and Payment Terms | 16 | |
Section 9.02 | Invoicing | 16 | |
Section 9.03 | Taxes | 16 | |
Article X | RIGHT OF FIRST OFFER | 17 | |
Article XI | INTELLECTUAL PROPERTY AND TECHNOLOGY | 17 | |
Section 11.01 | Intellectual Property | 17 | |
Section 11.02 | Access and Training | 19 | |
Section 11.03 | IP Indemnification | 20 | |
Article XII | GENERAL PROVISIONS | 21 | |
Section 12.01 | Authority | 21 | |
Section 12.02 | Notices | 21 | |
Section 12.03 | Entire Agreement, Waiver and Modification | 22 |
Section 12.04 | No Third Party Beneficiaries | 22 | |
Section 12.05 | Compliance with Laws and Regulations | 22 | |
Section 12.06 | Governing Law; Dispute Resolution | 23 | |
Section 12.07 | Confidentiality | 23 | |
Section 12.08 | Counterparts; Electronic Transmission of Signatures | 24 | |
Section 12.09 | Assignment | 24 | |
Section 12.10 | Rules of Construction | 24 | |
Section 12.11 | Non-Recourse | 25 | |
Section 12.12 | Audit | 25 | |
Section 12.13 | Independent Contractors | 25 | |
Section 12.14 | Non-Compete | 25 |
APPENDIX 1 | Scope of Supply |
APPENDIX 2 | Pricing |
APPENDIX 3 | Seller Standard Terms |
APPENDIX 4 | Required Drawings and Documentation |
APPENDIX 5 | Auxiliary Components |
SCHEDULE 4.01(a) | Exceptions to Distribution Exclusivity |
SCHEDULE 7.04 | Product Quality Requirements |
By | /s/ John Godsman Name: John Godsman Title: Vice President |
By | /s/ Lee Whitley Name: Lee Whitley Title: Corporate Secretary |
ARTICLE 1 DEFINITIONS | 2 | |||
Section 1.01. | Certain Defined Terms | 2 | ||
ARTICLE 2 EFFECTIVENESS; PURPOSE AND SCOPE | 14 | |||
Section 2.01. | [Intentionally Omitted] | 14 | ||
Section 2.02. | Purpose | 14 | ||
Section 2.03 | Supply Program | 14 | ||
Section 2.04. | Development Program | 14 | ||
ARTICLE 3 PROGRAM MANAGEMENT; AERO-DERIVATIVE PRODUCT | ||||
COMPETITIVENESS COMMITTEE | 15 | |||
Section 3.01. | Program Management and Operations | 15 | ||
Section 3.02. | Committees | 16 | ||
Section 3.03. | Agreement Implementation | 20 | ||
ARTICLE 4 TERM AND TERMINATION | 21 | |||
Section 4.01. | Term | 21 | ||
Section 4.02. | Termination Events | 21 | ||
Section 4.03. | LM Product Line Termination Upon Production Cessation | 23 | ||
Section 4.04. | Effects of Expiration or Termination | 24 | ||
Section 4.05. | Survival | 24 | ||
ARTICLE 5 EXCLUSIVITY | 25 | |||
Section 5.01. | BHGE Exclusive Purchasing Commitment | 25 | ||
Section 5.02. | GE Aviation Exclusive Supplying Commitment | 25 | ||
Section 5.03. | Rights Regarding New Engines | 25 | ||
Section 5.04. | Termination of BHGE Exclusive Purchasing Commitment | 26 | ||
Section 5.05. | Termination of GE Aviation Exclusive Supply Commitment | 26 | ||
Section 5.06. | Change of Control of BHGE | 27 | ||
ARTICLE 6 DEVELOPMENT PROGRAMS AND INTELLECTUAL PROPERTY | 27 | |||
Section 6.01. | Development Programs | 27 | ||
Section 6.02. | Background IP | 28 | ||
Section 6.03. | Foreground IP | 29 | ||
Section 6.04. | Technology Deliverables | 33 | ||
Section 6.05. | [Intentionally Omitted] | 34 | ||
Section 6.06. | Third Party Licenses | 35 | ||
Section 6.07. | Section 365(n) of the Bankruptcy Code | 35 | ||
Section 6.08. | Customers | 35 |
Section 6.09. | Reservation of Rights | 35 | ||
Section 6.10. | Further Assurances | 35 | ||
Section 6.11. | Access | 35 | ||
Section 6.12. | Further Assistance | 35 | ||
Section 6.13. | Prosecution and Maintenance | 36 | ||
Section 6.14. | Third Party Infringements, Misappropriations and Violations | 36 | ||
Section 6.15. | Abandonment of Foreground IP | 36 | ||
Section 6.16 | Cooperation Regarding Restrictions and Limitations Applicable to | |||
Licensed Intellectual Property | 37 | |||
Section 6.17. | Embedded Software License | 38 | ||
Section 6.18. | IP Indemnification | 38 | ||
Section 6.19. | Use of Trademarks | 39 | ||
ARTICLE 7 PROVISION OF LM PRODUCTS, SPARE PARTS AND SERVICE | 39 | |||
Section 7.01. | Purchase Orders | 39 | ||
Section 7.02. | Terms and Conditions of Purchase | 42 | ||
Section 7.03. | Pricing – LM Products, Spare Parts and Aftermarket Services | 45 | ||
Section 7.04. | Pricing – Engineering Services | 47 | ||
Section 7.05. | Lump Sum Payment | 48 | ||
Section 7.06. | Other Pricing and Costs | 48 | ||
Section 7.07. | Payment Terms; Taxes; and Audit | 49 | ||
Section 7.08. | Revenue Share Participant Management | 50 | ||
Section 7.09. | Introduction and Substantiation of New Repairs and Spare Parts | 51 | ||
Section 7.10. | Execution of Repairs | 54 | ||
Section 7.11. | Separation of LM Product Lines | 56 | ||
ARTICLE 8 ALLOCATION OF LIABILITY | 56 | |||
Section 8.01. | Limitation of Liability | 56 | ||
Section 8.02. | Disclaimer of Representations and Warranties | 58 | ||
Section 8.03. | Warranties | 58 | ||
Section 8.04. | Insurance | 62 | ||
ARTICLE 9 GENERAL PROVISIONS | 63 | |||
Section 9.01. | Representations and Warranties | 63 | ||
Section 9.02. | Notices | 63 | ||
Section 9.03. | Entire Agreement, Waiver and Modification | 64 | ||
Section 9.04. | No Third-Party Beneficiaries | 64 | ||
Section 9.05. | Compliance with Laws and Regulations | 64 | ||
Section 9.06. | Governing Law | 65 | ||
Section 9.07. | Dispute Resolution | 65 | ||
Section 9.08. | Confidentiality | 67 | ||
Section 9.09. | Counterparts; Electronic Transmission of Signatures | 68 | ||
Section 9.10. | Assignment | 69 |
Section 9.11. | Rules of Construction | 69 | ||
Section 9.12. | Non-Recourse | 69 | ||
Section 9.13. | Subcontractor Flow Downs for United States Government | |||
Commercial Items Contracts | 70 | |||
Section 9.14. | Independent Contractors | 70 | ||
Section 9.15. | Force Majeure | 70 | ||
Section 9.16. | Press Release and Public Statements | 70 |
GENERAL ELECTRIC COMPANY, acting through its GE Aviation business unit | |
By: | /s/ Jaclyn Welsh |
Name: Jaclyn Welsh | |
Title: GM Aeroderivative Engine Operations |
BAKER HUGHES, A GE COMPANY, LLC | |
By: | /s/ Lee Whitley |
Name: Lee Whitley | |
Title: Corporate Secretary |
A. | GE Power and BHGE agreed to form an aero-derivative joint venture (“ADGTJV”) pursuant to that certain Transaction Agreement, dated as of February 28, 2019, among BHGE, GE Power, and Aero Products and Services JV, LLC (f/k/a GE Aero Power LLC); |
B. | BHGE and GE Power desire to engage with GE Aviation in the purchase of LM Products, Spare Parts and Services, as set forth in the Supply and Technology Development Agreement by and among, GE Aviation, GE Power, and BHGE, dated as of November 13, 2018 (as amended, modified or supplemented from time to time in accordance with its terms, the “STDA”); |
C. | The Parties anticipate that the JV Effective Date will not have occurred as of the Trigger Date, and therefore GE Aviation and BHGE are entering into the Bridge Supply and Technology Development Agreement (as amended, modified or supplemented from time to time in accordance with its terms, the “Bridge STDA”) simultaneously with this Side Agreement, as required pursuant to Section 9.17 of the STDA; |
D. | BHGE, GE Power and GE Aviation have recognized that demand for LM Products, Spare Parts and Services existing in the GE Aviation system as of the Side Agreement Effective Date was created via historical processes that did not involve POs being reviewed and accepted by GE Aviation and therefore, any Pending Demand (as defined below) is not currently valid or binding on GE Aviation; |
E. | BHGE, GE Power and GE Aviation have also recognized a need to clarify the terms applicable to New Demand (as defined below) placed by BHGE and GE Power with GE Aviation between the Side Agreement Effective Date and the STDA Effective Date; and |
F. | The Parties desire this Side Agreement to amend and supplement the terms of the Bridge STDA and STDA (as applicable) to (i) set forth their agreement as to the terms and conditions of purchase for Pending Demand and New Demand (as defined below); (ii) provide for the assignment of Pending Demand and New Demand from BHGE and GE Power, respectively, to ADGTJV upon the effectiveness of the STDA, (iii) reflect the decision of the parties to remove the G5 Reserve, and (iv) incorporate the other changes set forth in this Side Agreement. |
1. | Defined Terms. The following capitalized terms used in this Side Agreement shall have the meanings set forth below. Capitalized terms used in this Side Agreement but not otherwise defined herein shall have the meanings assigned to such terms in the Bridge STDA or the STDA (as applicable). |
a. | “2019 Delivered Interim Products” shall mean Pending Demand (other than Designated 2019 Product Orders) and New Demand that are delivered on or before December 31, 2019. |
b. | “2020 Delivered Interim Products” shall mean Pending Demand and New Demand that are delivered on or after January 1, 2020. |
c. | “AR Supply Agreement” shall mean the Amended and Restated Supply Agreement, dated as of November 13, 2018, between GE Aviation and BHGE. |
d. | “BHGE New Demand” shall mean the purchase orders issued by BHGE and/or BHGE Affiliates to GE Aviation, or demand placed in the GE Aviation system or otherwise by or on behalf of BHGE and/or BHGE Affiliates, for LM Products, Spare Parts and Services, between the Side Agreement Effective Date and the earlier of the Bridge STDA Effective Date or the STDA Effective Date. |
e. | “BHGE Orders” shall mean all Designated 2019 Product Orders, 2019 Delivered Interim Products, and 2020 Delivered Interim Products applicable to BHGE (and/or its Affiliates). |
f. | “Bridge STDA Effective Date” shall mean the Trigger Date (as defined in the Bridge STDA). |
g. | “Designated 2019 Product Orders” shall mean the Pending Demand set forth in Schedule 1 attached hereto and incorporated herein by this reference, which are scheduled to deliver in 2019. |
h. | “LM9000 Core” shall mean all production parts for the LM9000 core engine (i.e. which consists of the combination of the HPC, combustor (CDN), Air collector, HPT modules and related hardware kits), except for the parts provided by or procured by BHGE. |
i. | “LM9000 Launch Customer Order” shall mean that certain order placed by BHGE’s Affiliate, Nuovo Pignone, and accepted by GE Aviation for a total of twenty-two (22) LM9000 engines for BHGE’s launch customer, Novatek for its Arctic LNG 2 project, which is subject to that certain Purchase Order Modification Agreement by and between BHGE and GE Aviation dated as of July 31, 2019 (the “POMA”). |
j. | “New Demand” means individually and collectively, (i) the BHGE New Demand; and (ii) all LM Products, Spare Parts and Services ordered by GE Power from GE Aviation between the Side Agreement Effective Date and the STDA Effective Date via purchase order, demand placement in the GE Aviation system or otherwise by or on behalf of GE Power. For the avoidance of doubt, the LM9000 Launch Customer Order is not New Demand. |
k. | “Non-Recourse Products” shall mean that the relevant LM Products, Spare Parts and Services are delivered “AS-IS” and without any express or implied warranties, or guarantees of performance, and are not subject to any liquidated damages or other liability of GE Aviation for delays. |
l. | “Pending Demand” shall mean demand for LM Products, Spare Parts and Services existing in the GE Aviation system before the Side Agreement Effective Date that was placed with GE Aviation via a historical process that did not involve a PO being reviewed and accepted by GE Aviation. |
m. | “STDA Effective Date” shall mean the Effective Date under (and as defined in) the STDA. |
2. | LM9000 Launch Customer Order; Pending Demand and New Demand. The Parties acknowledge that the following four (4) distinct categories of demand for LM Products, Spare Parts and Services may exist prior to the Side Agreement Effective Date and be relevant hereafter: |
3. | Governing Terms. For the purposes of the Designated 2019 Product Orders, the 2019 Delivered Interim Products, and the 2020 Delivered Interim Products, the applicable terms governing the relationship between GE Aviation, on the one hand, and BHGE or GE Power (as applicable), on the other hand, shall be as follows: |
a. | With respect to BHGE: |
i. | commencing on the Side Agreement Effective Date and continuing until the earlier of the Bridge STDA Effective Date or the STDA Effective Date, (a) all BHGE Orders shall be subject to and performed in accordance with the terms of the AR Supply Agreement, except that the terms of Articles 7, 8 and 9 of the Bridge STDA (as though in effect) as well as the terms of this Side Agreement, shall govern, control and take precedence over the terms of the AR Supply Agreement, and (b) for the avoidance of doubt, GE Aviation shall be obligated to accept all BHGE New Demand from BHGE or BHGE Affiliates that complies with the terms of Section 7.01 of the Bridge STDA; |
ii. | if the Bridge STDA Effective Date occurs prior to the STDA Effective Date, the Bridge STDA shall apply (in its entirety) with respect to all BHGE Orders and shall be considered fully in effect during the period commencing on the Bridge STDA Effective Date and ending on the STDA Effective Date, at which time the STDA shall apply (in its entirety) to all BHGE Orders and shall be considered fully in effect as of the STDA Effective Date; and |
iii. | if the STDA Effective Date occurs prior to the Bridge STDA Effective Date, the STDA shall apply (in its entirety) and shall be considered fully in effect as of the STDA Effective Date. |
b. | With respect to GE Power: (i) from the Side Agreement Effective Date until the STDA Effective Date, all Designated 2019 Product Orders, 2019 Delivered Interim Products, and 2020 Delivered Interim Products applicable to GE Power shall be subject to and performed in accordance with historical practices; and (ii) subject to Section 5 below, upon the occurrence of the STDA Effective Date, the STDA shall apply. |
4. | Cost Baseline Determination. Notwithstanding anything to the contrary in Section 7.03(d)(ii) of the STDA or Section 7.03(d)(ii) of the Bridge STDA, GE Aviation shall not be required to determine the initial Cost Baseline for all existing LM Products promptly after the Trigger Date, but rather shall have until December 31, 2019 to determine such initial Cost Baseline, which initial Cost Baseline shall be effective as of January 1, 2020 and applicable to the LM Products until GE Aviation resets the same in accordance with Section 7.03(d)(iii) of the STDA or Section 7.03(d)(iii) of the Bridge STDA, as applicable. |
5. | Assignment of Pending Demand and New Demand to ADGTJV. All Pending Demand (including the Designated 2019 Product Orders) and New Demand that have not been delivered prior to the STDA Effective Date shall be assigned by BHGE and GE Power, as applicable, to ADGTJV, effective as of the STDA Effective Date. |
6. | Lump Sum Payments. BHGE and GE Power acknowledge and agree that BHGE shall be responsible for all Lump Sum Payment obligations under the Bridge STDA and ADGTJV shall be responsible for all Lump Sum Payment obligations under the STDA (including all Lump Sum Payment obligations in respect of all Pending Demand and New Demand assigned by BHGE or GE Power, as applicable, to ADGTJV pursuant to Section 5 of this Side Agreement). For avoidance of doubt, this Section 6 is intended only to clarify whether a particular Lump Sum Payment is payable under the Bridge STDA by BHGE or under the STDA by ADGTJV, and this Section 6 shall in no way limit, modify, reduce, or otherwise revise the Lump Sum Payment (including the calculation of the amount thereof) payable to GE Aviation under the Bridge STDA or the STDA. |
7. | Termination of LM2500 G5 Payment Reduction. The Parties acknowledge and agree that Section 7.04(c) of the STDA is hereby deleted in its entirety and shall no longer be in force or effect. |
8. | Assembly of LM9000 Core. Notwithstanding anything to the contrary in Section 2.03(c) of the STDA or Section 2.03(c) of the Bridge STDA, the Parties agree that GE Aviation’s obligations with respect to the Supply Program for the LM9000 shall include providing and assembling the LM9000 Core (except with respect to the LM9000 Launch Customer Order, for which GE Aviation’s obligations shall include providing and assembling both the LM9000 Core and the booster). GE Aviation’s obligations with respect to the Supply Program for the LM9000 shall not include any final assembly or testing responsibilities with |
9. | Bridge STDA PO Implementation Process. BHGE and GE Aviation agree to meet as soon as reasonably possible after the Side Agreement Effective Date to discuss in good faith and agree upon the PO and forecasting processes (including cost estimates until Cost Baselines are established) required for implementation of the Bridge STDA. |
10 | Miscellaneous. Except as expressly provided in this Side Agreement, all other provisions of the Bridge STDA and STDA shall remain unchanged by this Side Agreement and in full force and effect (in each case to the extent provided therein). In the event of a conflict between the terms of this Side Agreement and the terms of the STDA or Bridge STDA (as applicable), the terms of this Side Agreement shall govern and control. Further, the provisions of Article 9 of the STDA (other than Section 9.17 of the STDA) are incorporated herein by this reference, mutatis mutandis. This Side Agreement, together with the Bridge STDA and STDA, constitutes the entire agreement between the Parties regarding the matters set forth herein and may be amended only by duly executed written agreement, and supersedes all prior agreements, whether written or oral in relation to such matters. This Side Agreement may be executed by the Parties in one or more counterparts, which when executed and delivered to each other Party shall constitute one and the same document and be an original for all purposes. |
1. | “Trigger Date” shall have the meaning ascribed to it in the Stockholders Agreement, dated as of July 3, 2017 (as it may be amended, supplemented or modified from time to time), between GE and Baker Hughes. |
2. | Schedule 1.1 of the GE Global Employee Services Agreement is hereby replaced in its entirety with Schedule A attached to this Amendment. |
3. | The provisions of Article II of the GE Global Employee Services Agreement are incorporated herein by reference, mutatis mutandis, to be applied and construed consistent with the application of such provisions in the GE Global Employee Services Agreement. This Amendment shall constitute a written instrument executed by each of the parties in accordance with Section 3.9 of the GE Global Employee Services Agreement. |
4. | Except as specifically amended by this Amendment, all other terms and conditions of the GE Global Employee Services Agreement shall continue in full force and effect. |
GENERAL ELECTRIC COMPANY By:/s/ John Godsman Name: John Godsman Title: Vice President |
BAKER HUGHES, A GE COMPANY, LLC By:/s/ Lee Whitley Name: Lee Whitley Title: Corporate Secretary |
By: | /s/ Lee Whitley Name: Lee Whitley Title: Corporate Secretary |
By: | /s/ Victoria Vron Name: Victoria Vron Title: Vice President |
Date: | July 31, 2019 | By: | /s/ Lorenzo Simonelli | |
Lorenzo Simonelli | ||||
President and Chief Executive Officer | ||||
Date: | July 31, 2019 | By: | /s/ Brian Worrell | |
Brian Worrell | ||||
Chief Financial Officer | ||||
(i) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(ii) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report. |
/s/ Lorenzo Simonelli | ||||
Name: | Lorenzo Simonelli | |||
Title: | President and Chief Executive Officer | |||
Date: | July 31, 2019 | |||
/s/ Brian Worrell | ||||
Name: | Brian Worrell | |||
Title: | Chief Financial Officer | |||
Date: | July 31, 2019 |
Condensed Consolidated Statements of Financial Position (Unaudited) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
|||
---|---|---|---|---|---|
Current assets: | |||||
Cash and cash equivalents | [1] | $ 3,138 | $ 3,677 | ||
Current receivables, net | 6,384 | 6,062 | |||
Inventories, net | 4,807 | 4,620 | |||
All other current assets | 711 | 639 | |||
Total current assets | 15,040 | 14,998 | |||
Property, plant and equipment (net of accumulated depreciation of $3,918 and $3,625) | 6,130 | 6,228 | |||
Goodwill | 20,411 | 20,423 | |||
Other intangible assets, net | 5,510 | 5,719 | |||
Contract and other deferred assets | 1,849 | 1,894 | |||
All other assets | 2,845 | 1,900 | |||
Deferred income taxes | 898 | 1,072 | |||
Total assets | [1] | 52,683 | 52,234 | ||
Current liabilities: | |||||
Accounts payable | 3,959 | 4,018 | |||
Short-term debt and current portion of long-term debt | [1] | 892 | 942 | ||
Progress collections and deferred income | 2,214 | 1,765 | |||
All other current liabilities | 2,248 | 2,276 | |||
Total current liabilities | 9,313 | 9,001 | |||
Long-term debt | 6,256 | 6,285 | |||
Deferred income taxes | 27 | 94 | |||
Liabilities for pensions and other postretirement benefits | 997 | 1,018 | |||
All other liabilities | 1,426 | 960 | |||
Members' equity: | |||||
Members' capital (common units 1,037 and 1,035 issued and outstanding as of June 30, 2019 and December 31, 2018, respectively) | 37,418 | 37,582 | |||
Retained loss | (306) | (354) | |||
Accumulated other comprehensive loss | (2,564) | (2,462) | |||
Baker Hughes, a GE company, LLC members' equity | 34,548 | 34,766 | |||
Noncontrolling interests | 116 | 110 | |||
Total equity | 34,664 | 34,876 | |||
Total liabilities and equity | $ 52,683 | $ 52,234 | |||
|
Condensed Consolidated Statements of Financial Position (Unaudited) (Parenthetical) - USD ($) shares in Millions, $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Common units issued (in shares) | 1,037 | 1,035 |
Common units outstanding (in units) | 1,037 | 1,035 |
Property, plant and equipment, accumulated depreciation | $ 3,918 | $ 3,625 |
Related party amount, due to related party | GE | ||
Assets held on behalf of GE | 856 | 896 |
Cash held on behalf of GE | 739 | 747 |
Related party amount, due to related party | GE | Angola Bonds | ||
Investment securities held on behalf of GE | $ 117 | $ 149 |
Condensed Consolidated Statements of Changes in Members' Equity (Unaudited) (Parenthetical) - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Statement of Stockholders' Equity [Abstract] | ||||
Cash distribution per common unit (in dollars per unit) | $ 0.18 | $ 0.18 | $ 0.36 | $ 0.36 |
Basis of Presentation and Summary of Significant Accounting Policies |
6 Months Ended |
---|---|
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES DESCRIPTION OF THE BUSINESS Baker Hughes, a GE company, LLC, a Delaware limited liability company (the Company, BHGE LLC, we, us, or our), and the successor to Baker Hughes Incorporated, a Delaware corporation (Baker Hughes) is a fullstream oilfield technology provider that has a unique mix of equipment and service capabilities. We conduct business in more than 120 countries and employ approximately 67,000 employees. On July 3, 2017, we completed the combination of the oil and gas business (GE O&G) of General Electric Company (GE) and Baker Hughes (the Transactions). As of June 30, 2019, GE owns approximately 50.3% of our common units and Baker Hughes, a GE company (BHGE) owns approximately 49.7% of our common units. BASIS OF PRESENTATION In connection with the Transactions, we entered into and are governed by an Amended & Restated Limited Liability Company Agreement, dated as of July 3, 2017 (the BHGE LLC Agreement). Under the BHGE LLC Agreement, EHHC Newco, LLC (EHHC), a wholly owned subsidiary of BHGE, is our sole managing member and BHGE is the sole managing member of EHHC. As our managing member, EHHC conducts, directs and exercises full control over all our activities, including our day-to-day business affairs and decision-making, without the approval of any other member. As such, EHHC is responsible for all our operational and administrative decisions and the day-to-day management of our business. The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. and such principles, U.S. GAAP) and pursuant to the rules and regulations of the SEC for interim financial information. Accordingly, certain information and disclosures normally included in our annual financial statements have been condensed or omitted. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated and combined financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018 (2018 Annual Report). In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary by management to fairly state our results of operations, financial position and cash flows of the Company and its subsidiaries for the periods presented and are not indicative of the results that may be expected for a full year. The Company's financial statements have been prepared on a consolidated basis. Under this basis of presentation, our financial statements consolidate all of our subsidiaries (entities in which we have a controlling financial interest, most often because we hold a majority voting interest). All intercompany accounts and transactions have been eliminated. In the Company's financial statements and notes, certain amounts have been reclassified to conform with the current year presentation. In the notes to unaudited condensed consolidated financial statements, all dollar and unit amounts in tabulations are in millions of dollars and units, respectively, unless otherwise indicated. Certain columns and rows in our financial statements and notes thereto may not add due to the use of rounded numbers. In June 2018, GE announced their intention to pursue an orderly separation from BHGE over time. In the three and six months ended June 30, 2019, separation and merger related costs include primarily costs incurred in connection with the finalization of the Master Agreement Framework and costs related to the anticipated separation from GE. In the three and six months ended June 30, 2018, separation and merger related costs are comprised solely of costs associated with the Transactions. See "Note 15. Related Party Transactions" for further information on the Master Agreement Framework. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Please refer to "Note 1. Basis of Presentation and Summary of Significant Accounting Policies," to our consolidated financial statements from our 2018 Annual Report for the discussion of our significant accounting policies. Please refer to the "New Accounting Standards Adopted" section of this Note for changes to our accounting policies. Cash and Cash Equivalents As of June 30, 2019 and December 31, 2018, we had $1,267 million and $1,208 million, respectively, of cash held in bank accounts that cannot be released, transferred or otherwise converted into a currency that is regularly transacted internationally, due to lack of market liquidity, capital controls or similar monetary or exchange limitations limiting the flow of capital out of the jurisdiction. These funds are available to fund operations and growth in these jurisdictions, and we do not currently anticipate a need to transfer these funds to the U.S. Included in these amounts are $429 million and $461 million, as of June 30, 2019 and December 31, 2018, respectively, held on behalf of GE. Cash and cash equivalents includes a total of $739 million and $747 million of cash at June 30, 2019 and December 31, 2018, respectively, held on behalf of GE, and a corresponding liability is reported in short-term borrowings. See "Note 15. Related Party Transactions" for further details. NEW ACCOUNTING STANDARDS ADOPTED Leases On January 1, 2019, we adopted Accounting Standards Update (ASU) No. 2016-02, Leases, and the related amendments (ASC 842). This ASU requires lessees to recognize an operating lease asset and a lease liability on the balance sheet, with the exception of short-term leases. We adopted the standard using the modified retrospective approach under which leases existing at, or entered into after January 1, 2019 were required to be recognized and measured. Prior period amounts have not been adjusted and continue to be reflected in accordance with our historical accounting. The Company has elected the practical expedients upon transition that allow entities not to reassess lease identification, classification and initial direct costs for leases that existed prior to adoption. The most significant impact of the standard is the recognition of right-of-use (ROU) assets and operating lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. We implemented internal controls and key system functionality to enable the preparation of financial information on adoption. We determine if an arrangement is a lease at inception. ROU assets are included in "All other assets" and operating lease liabilities are included in "All other current liabilities" and "All other liabilities" on our consolidated statement of financial position. Finance lease assets are included in "Property, plant and equipment," and finance lease liabilities are included in "Short-term debt," and "Long-term debt" on our consolidated statement of financial position. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at the later of the lease commencement date or the effective date of adoption of ASC 842 on January 1, 2019, based on the present value of lease payments over the remaining lease term. Finance lease ROU assets and liabilities are recognized at commencement date. As most of our leases do not provide an implicit rate, we use our incremental collateralized borrowing rate based on the information available at commencement date in determining the present value of lease payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Short-term leases under one year do not result in a ROU asset, but are recognized in the income statement only on a straight-line basis over the lease term. The Company has made an election to include within our operating lease liability future payments for both lease and non-lease components. See "Note 8. Leases" for additional information. The adoption of this standard resulted in the recording of ROU assets and operating lease liabilities of $844 million as of January 1, 2019 on our consolidated statements of financial position with an immaterial impact on our consolidated statements of equity and no related impact on our consolidated statements of income (loss). Short-term leases have not been recorded on the consolidated statements of financial position. Our accounting for finance leases remained substantially unchanged. Derivatives and Hedging On January 1, 2019, we adopted ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. Since there was no impact from the new guidance to our consolidated financial statements, no transition adjustments were recorded. ASU 2017-12 simplifies the application of hedge accounting and expands the strategies that qualify for hedge accounting. In accordance with the ASU, both the effective and ineffective portion of a cash flow hedge are initially reported as a component of accumulated other comprehensive income (loss) and reclassified into earnings when the forecasted transaction affects earnings. The ASU requires certain changes to the presentation of hedge accounting in the financial statements and some new or modified disclosures. See "Note 13. Financial Instruments" for additional information. NEW ACCOUNTING STANDARDS TO BE ADOPTED In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses. The ASU introduces a new accounting model, the Current Expected Credit Losses model (CECL), which requires earlier recognition of credit losses and additional disclosures related to credit risk. The CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses for loans and other receivables at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. This model replaces the multiple existing impairment models in current U.S. GAAP, which generally require that a loss be incurred before it is recognized. The new standard will also apply to receivables arising from revenue transactions such as contract assets and accounts receivables and is effective for fiscal years beginning after December 15, 2019. We continue to evaluate the effect of the standard on our consolidated financial statements. All other new accounting pronouncements that have been issued but not yet effective are currently being evaluated and at this time are not expected to have a material impact on our financial position or results of operations.
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Revenue Related to Contracts with Customers |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Related to Contracts with Customers | REVENUE RELATED TO CONTRACTS WITH CUSTOMERS DISAGGREGATED REVENUE We disaggregate our revenue from contracts with customers by primary geographic markets.
REMAINING PERFORMANCE OBLIGATIONS As of June 30, 2019 and 2018, the aggregate amount of the transaction price allocated to the unsatisfied (or partially unsatisfied) performance obligations was $20.6 billion and $20.9 billion, respectively. As of June 30, 2019, we expect to recognize revenue of approximately 47%, 63% and 89% of the total remaining performance obligations within 2, 5, and 15 years, respectively, and the remaining thereafter. Contract modifications could affect both the timing to complete as well as the amount to be received as we fulfill the related remaining performance obligations. PROGRESS COLLECTIONS AND DEFERRED INCOMEContract liabilities include progress collections, which reflects billings in excess of revenue, and deferred income on our long-term contracts to construct technically complex equipment, long-term product maintenance or extended warranty arrangements. Contract liabilities are comprised of the following:
Revenue recognized during the three months ended June 30, 2019 and 2018 that was included in the contract liabilities at the beginning of the period was $295 million and $404 million, respectively, and $848 million and $1,006 million, respectively, during the six months ended June 30, 2019 and 2018.
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Current Receivables |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current Receivables | CURRENT RECEIVABLES Current receivables are comprised of the following:
Customer receivables are recorded at the invoiced amount. Related parties consists primarily of amounts owed to us by GE. The "Other" category consists primarily of indirect taxes, customer retentions, other tax receivables and advance payments to suppliers.
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Inventories |
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Inventory, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Inventories | INVENTORIES Inventories, net of reserves of $416 million and $430 million as of June 30, 2019 and December 31, 2018, respectively, are comprised of the following:
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Goodwill and Other Intangible Assets |
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Goodwill and Other Intangible Assets | GOODWILL AND OTHER INTANGIBLE ASSETS GOODWILL The changes in the carrying value of goodwill are detailed below by segment:
We test goodwill for impairment annually in the third quarter using data as of July 1 of that year. Our reporting units are the same as our four reportable segments. We also test goodwill for impairment between annual impairment testing dates whenever events or circumstances occur that, in our judgment, could more likely than not reduce the fair value of one or more reporting units below its carrying amount. In assessing the possibility that a reporting unit’s fair value has been reduced below its carrying amount due to the occurrence of events or circumstances between annual impairment testing dates, we consider all available evidence, including, but not limited to, (i) the results of our impairment testing at the prior annual impairment testing date, in particular the magnitude of the excess of fair value over carrying value observed, (ii) changes in market conditions, (iii) downward revisions to internal forecasts, and the magnitude thereof, if any, (iv) the impact of the separation from GE, if any, and (v) declines in the market capitalization of BHGE below its book value, and the magnitude and duration of those declines, if any. BHGE's stock price has historically experienced volatility as a result of industry-wide and macroeconomic factors, including principally global oil prices. In addition, more recently, we believe that BHGE's share price has been subject to increased volatility resulting from, among other things, uncertainty around the impact, if any, of the announced intention of GE to pursue an orderly separation from BHGE over time, which prompted us to evaluate whether circumstances had changed that would more likely than not reduce the fair value of one or more of our reporting units below their carrying value as of June 30, 2019. While conducting this evaluation, we considered macroeconomic and industry conditions, the magnitude and duration of any declines in BHGE's market capitalization and overall financial performance of our reporting units. We also considered whether there were any changes in our long-term forecasts, which includes assumptions about future commodity pricing and supply and demand for our goods and services, all of which require considerable judgment in estimation. Through this qualitative review we did not identify any reporting units that required an interim impairment test. In connection with our most recent annual impairment test (as of July 1, 2018), two of our reporting units, Oilfield Services and Oilfield Equipment, had fair values that exceeded their carrying values by amounts ranging between 15% and 20%, while our other reporting units had substantially higher "headroom" calculations. While we believe that BHGE's share price reflects transitory circumstances/conditions as described above, there can be no assurances that further or sustained declines in its share price would not result in a material impairment of goodwill. OTHER INTANGIBLE ASSETS Intangible assets are comprised of the following:
Intangible assets are generally amortized on a straight-line basis with estimated useful lives ranging from 1 to 30 years. Amortization expense for the three months ended June 30, 2019 and 2018 was $97 million and $101 million, respectively, and $193 million and $240 million, respectively, for the six months ended June 30, 2019 and 2018. Estimated amortization expense for the remainder of 2019 and each of the subsequent five fiscal years is expected to be as follows:
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Contract and Other Deferred Assets |
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Deferred Revenue Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract and Other Deferred Assets | CONTRACT AND OTHER DEFERRED ASSETS A majority of our long-term product service agreements relate to our Turbomachinery & Process Solutions segment. Contract assets reflect revenue earned in excess of billings on our long-term contracts to construct technically complex equipment, long-term product maintenance or extended warranty arrangements and other deferred contract related costs. Contract assets are comprised of the following:
Revenue recognized during the three months ended June 30, 2019 and 2018 from performance obligations satisfied (or partially satisfied) in previous periods related to our long-term service agreements was $14 million and $12 million, respectively, and $21 million and $22 million during the six months ended June 30, 2019 and 2018, respectively. This includes revenue recognized from revisions to cost or billing estimates that may affect a contract’s total estimated profitability resulting in an adjustment of earnings.
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Progress Collections and Deferred Income |
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Progress Collections and Deferred Income | REVENUE RELATED TO CONTRACTS WITH CUSTOMERS DISAGGREGATED REVENUE We disaggregate our revenue from contracts with customers by primary geographic markets.
REMAINING PERFORMANCE OBLIGATIONS As of June 30, 2019 and 2018, the aggregate amount of the transaction price allocated to the unsatisfied (or partially unsatisfied) performance obligations was $20.6 billion and $20.9 billion, respectively. As of June 30, 2019, we expect to recognize revenue of approximately 47%, 63% and 89% of the total remaining performance obligations within 2, 5, and 15 years, respectively, and the remaining thereafter. Contract modifications could affect both the timing to complete as well as the amount to be received as we fulfill the related remaining performance obligations. PROGRESS COLLECTIONS AND DEFERRED INCOMEContract liabilities include progress collections, which reflects billings in excess of revenue, and deferred income on our long-term contracts to construct technically complex equipment, long-term product maintenance or extended warranty arrangements. Contract liabilities are comprised of the following:
Revenue recognized during the three months ended June 30, 2019 and 2018 that was included in the contract liabilities at the beginning of the period was $295 million and $404 million, respectively, and $848 million and $1,006 million, respectively, during the six months ended June 30, 2019 and 2018.
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Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | LEASES Our leasing activities primarily consist of operating leases for administrative offices, manufacturing facilities, research centers, service centers, sales offices and certain equipment.
For the three and six months ended June 30, 2018, total operating lease expense was $188 million and $375 million, respectively. Cash flows used in operating activities for operating leases approximates our expense for the three and six months ended June 30, 2019 and 2018. As of June 30, 2019, maturities of our operating lease liabilities are as follows:
Amounts recognized in the condensed consolidated statement of financial position as of June 30, 2019:
ROU assets of $821 million as of June 30, 2019 were included in "All other assets" in our condensed consolidated statements of financial position. The weighted-average remaining lease term as of June 30, 2019 was approximately nine years for our operating leases. The weighted-average discount rate used to determine the operating lease liability as of June 30, 2019 was 4.4%.
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Borrowings |
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Borrowings | BORROWINGS Short-term and long-term borrowings are comprised of the following:
We have a $3 billion committed unsecured revolving credit facility (the 2017 Credit Agreement) with commercial banks maturing in July 2022. The 2017 Credit Agreement contains certain customary representations and warranties, certain affirmative covenants and no negative covenants. Upon the occurrence of certain events of default, our obligations under the 2017 Credit Agreement may be accelerated. Such events of default include payment defaults to lenders under the 2017 Credit Agreement, and other customary defaults. No such events of default have occurred. At June 30, 2019 and December 31, 2018, there were no borrowings under the 2017 Credit Agreement. We have a commercial paper program under which we may issue from time to time up to $3 billion in commercial paper with maturities of no more than 397 days. At June 30, 2019 and December 31, 2018, there were no borrowings outstanding under the commercial paper program. The maximum combined borrowing at any time under both the 2017 Credit Agreement and the commercial paper program is $3 billion. Concurrent with the Transactions associated with the acquisition of Baker Hughes on July 3, 2017, Baker Hughes Co-Obligor, Inc. became a co-obligor, jointly and severally with us, on our registered debt securities. This co-obligor is a 100%-owned finance subsidiary of the Company that was incorporated for the sole purpose of serving as a co-obligor of debt securities and has no assets or operations other than those related to its sole purpose. Baker Hughes Co-Obligor, Inc. is also a co-obligor of the $3,950 million senior notes issued in December 2017 by us in a private placement and subsequently registered in January 2018. Certain Senior Notes contain covenants that restrict our ability to take certain actions, including, but not limited to, the creation of certain liens securing debt, the entry into certain sale-leaseback transactions and engaging in certain merger, consolidation and asset sale transactions in excess of specified limits. The estimated fair value of total borrowings at June 30, 2019 and December 31, 2018 was $7,132 million and $6,629 million, respectively. For a majority of our borrowings the fair value was determined using quoted period-end market prices. Where market prices are not available, we estimate fair values based on valuation methodologies using current market interest rate data adjusted for our non-performance risk. See "Note 15. Related Party Transactions" for additional information on the short-term borrowings from GE.
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Employee Benefit Plans |
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Employee Benefit Plans | EMPLOYEE BENEFIT PLANS Historically, certain of our U.S. employees were covered under various U.S. GE employee benefit plans, including GE's retirement plans (pension, retiree health and life insurance, and savings benefit plans). From January 1, 2019, these U.S. employees ceased to participate in the GE U.S. plans. In addition, certain United Kingdom (UK) employees participated in the GE UK Pension Plan. From May 1, 2019, these UK employees ceased to participate in the GE UK Pension Plan. We were allocated relevant participation costs for these GE employee benefit plans as part of multi-employer plans. Expenses associated with our participation in these plans was $1 million and $43 million in the three months ended June 30, 2019 and 2018, respectively, and $3 million and $80 million in the six months ended June 30, 2019 and 2018, respectively. During the second quarter of 2019, substantially, all of the assets and liabilities of the GE UK Pension Plan related to the oil & gas businesses have been transferred to BHGE on a fully funded basis. In addition to these GE plans, certain of our employees are also covered by company sponsored employee defined benefit plans. These defined benefit plans include four U.S. plans and six non-U.S. plans, primarily in the UK, Germany, and Canada, all with plan assets or obligations greater than $20 million. We use a December 31 measurement date for these plans. These defined benefit plans generally provide benefits to employees based on formulas recognizing length of service and earnings. The components of net periodic cost (benefit) of plans sponsored by us are as follows for the three and six months ended June 30:
The service cost component of the net periodic cost (benefit) is included in operating income (loss) and all other components are included in non operating income (loss) in our condensed consolidated statements of income (loss).
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Income Taxes |
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Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES For the quarter ended June 30, 2019, income tax expense was $95 million compared to a tax expense of $62 million for the prior year quarter. The difference between the U.S. statutory tax rate of 21% and the current effective tax rate of 113% is primarily related to the geographical mix of earnings and losses, coupled with $69 million related to losses with no tax benefit due to valuation allowances and tax effects of the U.S. partnership structure. For the six months ended June 30, 2019, income tax expense was $162 million compared to a tax expense of $100 million for the six months ended June 30, 2018. The difference between the U.S. statutory tax rate of 21% and the current effective tax rate of 73% is primarily related to the geographical mix of earnings and losses, coupled with $90 million related to losses with no tax benefit due to valuation allowances and tax effects of the U.S. partnership structure. We are a partnership for U.S. federal tax purposes, therefore, any tax effects associated with the U.S. are recognized by our members and not reflected in our tax expense.
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Members' Equity |
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Partners' Capital Notes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Members' Equity | MEMBERS' EQUITY COMMON UNITS The BHGE LLC Agreement provides that initially there is one class of common units, which are currently held by BHGE and GE. If BHGE issues a share of Class A common stock, including in connection with an equity incentive or similar plan, we will also issue a corresponding common unit to BHGE or one of its direct subsidiaries. For the six months ended June 30, 2019 we issued 2,224 thousand common units to BHGE in connection with the issuance of Class A common stock by BHGE. The following table presents the changes in the number of units outstanding (in thousands):
ACCUMULATED OTHER COMPREHENSIVE LOSS (AOCL) The following tables present the changes in accumulated other comprehensive loss, net of tax:
The amounts reclassified from accumulated other comprehensive loss during the six months ended June 30, 2019 represent amortization of net actuarial gain (loss) which are included in the computation of net periodic pension cost (see "Note 10. Employee Benefit Plans" for additional details). These reclassifications are recorded across the various cost and expense line items within the condensed consolidated statements of income (loss).
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | FINANCIAL INSTRUMENTS RECURRING FAIR VALUE MEASUREMENTS Our assets and liabilities measured at fair value on a recurring basis consists of derivative instruments and investment securities.
There were no transfers between Level 1, 2 and 3 during the six months ended June 30, 2019. The following table provides a reconciliation of recurring Level 3 fair value measurements for investment securities:
The most significant unobservable input used in the valuation of our Level 3 instruments is the discount rate. Discount rates are determined based on inputs that market participants would use when pricing investments, including credit and liquidity risk. An increase in the discount rate would result in a decrease in the fair value of our investment securities. There are no unrealized gains or losses recognized in the condensed consolidated statement of income (loss) on account of any Level 3 instrument still held at the reporting date. At June 30, 2019 and December 31, 2018, we held $117 million and $149 million, respectively, of these investment securities on behalf of GE.
FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS Our financial instruments include cash, cash equivalents, current receivables, investments, accounts payable, short and long-term debt, and derivative financial instruments. Except for long-term debt, the estimated fair value of these financial instruments at June 30, 2019 and December 31, 2018 approximates their carrying value as reflected in our condensed consolidated financial statements. For further information on the fair value of our debt, see "Note 9. Borrowings." DERIVATIVES AND HEDGING We use derivatives to manage our risks and do not use derivatives for speculation. The table below summarizes the fair value of all derivatives, including hedging instruments and embedded derivatives.
Derivatives are classified in the captions "All other current assets," "All other assets," "All other current liabilities," and "All other liabilities" depending on their respective maturity date. As of June 30, 2019 and December 31, 2018, $42 million and $67 million of derivative assets are recorded in "All other current assets" and $5 million and $7 million are recorded in "All other assets" of the condensed consolidated statements of financial position, respectively. As of June 30, 2019 and December 31, 2018, $47 million and $79 million of derivative liabilities are recorded in "All other current liabilities" and $3 million and $3 million are recorded in "All other liabilities" of the condensed consolidated statements of financial position, respectively. RISK MANAGEMENT STRATEGY We buy, manufacture and sell components and products as well as provide services across global markets. These activities expose us to changes in foreign currency exchange rates and commodity prices, which can adversely affect revenues earned and costs of operating our business. When the currency in which we sell equipment differs from the primary currency (known as its functional currency) and the exchange rate fluctuates, it will affect the revenue we earn on the sale. These sales and purchase transactions also create receivables and payables denominated in foreign currencies, along with other monetary assets and liabilities, which expose us to foreign currency gains and losses based on changes in exchange rates. Changes in the price of a raw material that we use in manufacturing can affect the cost of manufacturing. We use derivatives to mitigate or eliminate these exposures. FORMS OF HEDGING Cash Flow Hedges We use cash flow hedging primarily to reduce or eliminate the effects of foreign exchange rate changes on purchase and sale contracts. Accordingly, the vast majority of our derivative activity in this category consists of currency exchange contracts. We also use commodity derivatives to reduce or eliminate price risk on raw materials purchased for use in manufacturing. Economic Hedges These derivatives are not designated as hedges from an accounting standpoint (and therefore we do not apply hedge accounting to the relationship) but otherwise serve the same economic purpose as other hedging arrangements. Some economic hedges are used when changes in the carrying amount of the hedged item are already recorded in earnings in the same period as the derivative, making hedge accounting unnecessary. For some other types of economic hedges, changes in the fair value of the derivative are recorded in earnings currently but changes in the value of the forecasted foreign currency cash flows are only recognized in earnings when they occur. As a result, even though the derivative is an effective economic hedge, there is a net effect on earnings in each period due to differences in the timing of earnings recognition between the derivative and the hedged item. These derivatives are marked to fair value through earnings each period. NOTIONAL AMOUNT OF DERIVATIVES The notional amount of a derivative is the number of units of the underlying (for example, the notional principal amount of the debt in an interest rate swap). A substantial majority of the outstanding notional amount of $5.4 billion and $6.4 billion at June 30, 2019 and December 31, 2018, respectively, is related to hedges of anticipated sales and purchases in foreign currency, commodity purchases, and contractual terms in contracts that are considered embedded derivatives and for intercompany borrowings in foreign currencies. We generally disclose derivative notional amounts on a gross basis to indicate the total counterparty risk. Where we have gross purchase and sale derivative contracts for a particular currency, we look to execute these contracts with the same counterparty to reduce our exposure. The corresponding net notional amounts were $2.2 billion and $2.8 billion at June 30, 2019 and December 31, 2018, respectively. CASH FLOW HEDGES Changes in the fair value of cash flow hedges are recorded in a separate component of equity (referred to below as Accumulated Other Comprehensive Income, or AOCI) and are recorded in earnings in the period in which the hedged transaction occurs. The table below summarizes this activity by hedging instrument.
We expect to transfer $2 million to earnings as an expense in the next 12 months contemporaneously with the earnings effects of the related forecast transactions. At June 30, 2019 and December 31, 2018, the maximum term of derivative instruments that hedge forecast transactions was one year and two years, respectively. ECONOMIC HEDGES The following table summarizes the gains (losses) from derivatives not designated as hedges on the condensed consolidated statements of income (loss).
COUNTERPARTY CREDIT RISK Fair values of our derivatives can change significantly from period to period based on, among other factors, market movements and changes in our positions. We manage counterparty credit risk (the risk that counterparties will default and not make payments to us according to the terms of our agreements) on an individual counterparty basis.
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Segment Information | SEGMENT INFORMATION Our operating segments are organized based on the nature of markets and customers. We report our operating results through four operating segments that consists of similar products and services within each segment as described below. OILFIELD SERVICES (OFS) OFS provides products and services for onshore and offshore operations across the lifecycle of a well, ranging from drilling, evaluation, completion, production and intervention. Products and services include diamond and tri-cone drill bits, drilling services, including directional drilling technology, measurement while drilling & logging while drilling, downhole completion tools and systems, wellbore intervention tools and services, wireline services, drilling and completions fluids, oilfield and industrial chemicals, pressure pumping, and artificial lift technologies, including electrical submersible pumps. OILFIELD EQUIPMENT (OFE) OFE provides a broad portfolio of products and services required to facilitate the safe and reliable flow of hydrocarbons from the subsea wellhead to the surface. Products and services include pressure control equipment and services, subsea production systems and services, drilling equipment, and flexible pipeline systems. OFE designs and manufactures onshore and offshore drilling and production systems and equipment for floating production platforms and provides a full range of services related to onshore and offshore drilling activities. TURBOMACHINERY & PROCESS SOLUTIONS (TPS) TPS provides equipment and related services for mechanical-drive, compression and power-generation applications across the oil and gas industry as well as products and services to serve the downstream segments of the industry including refining, petrochemical, distributed gas, flow and process control and other industrial applications. The TPS portfolio includes drivers (aero-derivative gas turbines, heavy-duty gas turbines and synchronous and induction electric motors), compressors (centrifugal and axial, direct drive high speed, integrated, subsea compressors, turbo expanders and reciprocating), turn-key solutions (industrial modules and waste heat recovery), pumps, valves, and compressed natural gas (CNG) and small-scale liquefied natural gas (LNG) solutions used primarily for shale oil and gas field development. DIGITAL SOLUTIONS (DS) DS provides equipment and services for a wide range of industries, including oil & gas, power generation, aerospace, metals, and transportation. The offerings include sensor-based measurement, non-destructive testing and inspection, turbine, generator and plant controls and condition monitoring, as well as pipeline integrity solutions. SEGMENT RESULTS Summarized financial information is shown in the following tables. Consistent accounting policies have been applied by all segments within the Company, for all reporting periods.
The performance of our operating segments is evaluated based on segment operating income (loss), which is defined as income (loss) before income taxes and equity in loss of affiliate and before the following: net interest expense, net other non operating income (loss), corporate expenses, restructuring, impairment and other charges, inventory impairments, separation and merger related costs and certain gains and losses not allocated to the operating segments.
(1) Charges for inventory impairments are reported in the "Cost of goods sold" caption of the condensed consolidated statements of income (loss).
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Related Party Transactions [Abstract] | |
Related Party Transactions | RELATED PARTY TRANSACTIONS In connection with the Transactions on July 3, 2017, we entered into various agreements with GE and its affiliates that govern our relationship with GE following the Transactions including an Intercompany Services Agreement pursuant to which GE and its affiliates and the Company provide certain services to each other. GE provides certain administrative services, GE proprietary technology and use of certain GE trademarks for an annual service fee of $55 million. GE may also provide us with certain additional administrative services under the Intercompany Services Agreement and the fees for such services are based on actual usage of such services and historical GE intercompany pricing. Under the terms of the Master Agreement Framework, entered into on November 13, 2018, the annual intercompany services fee of $55 million that we agreed to pay GE as part of the Transactions is reduced by 50% to $27.5 million per year beginning on January 1, 2019. The Intercompany Services Agreement will terminate 90 days following the Trigger Date. See further discussion below. We incurred costs of $7 million and $14 million related to the Intercompany Services Agreement during the three months ended June 30, 2019 and 2018, respectively, and $14 million and $28 million during the six months ended June 30, 2019 and 2018, respectively. In addition, we provide GE and its affiliates with confidential access to certain of our proprietary technology and related developments and enhancements thereto related to GE's operations, products or service offerings. We sold $108 million and $84 million of products and services to GE and its affiliates during the three months ended June 30, 2019 and 2018, respectively, and $189 million and $184 million, during the six months ended June 30, 2019 and 2018, respectively. Purchases from GE and its affiliates were $428 million and $523 million during the three months ended June 30, 2019 and 2018, respectively, and $879 million and $926 million during the six months ended June 30, 2019 and 2018, respectively. MASTER AGREEMENT FRAMEWORK In June 2018, GE announced their intention to pursue an orderly separation from BHGE over time. On November 13, 2018, we entered into a Master Agreement and a series of related ancillary agreements and binding term sheets (which were later negotiated into definitive agreements) with GE and BHGE (collectively, the Master Agreement Framework) designed to further solidify the commercial and technological collaborations between us and GE and to facilitate our ability to transition from operating as a controlled company. In particular, the Master Agreement Framework contemplates long-term agreements between us, BHGE and GE on technology, fulfillment and other key areas to provide greater clarity to customers, employees and shareholders. Key elements of the Master Agreement Framework include: Secured long-term collaboration on critical rotating equipment Under the terms of the Master Agreement Framework, we have defined the parameters for a long-term collaboration and strategic relationship with GE on certain critical rotating equipment products. We have entered into an aero-derivative joint venture (JV) agreement with GE to form a JV relating to the parties’ respective aero-derivative gas turbine products and services. Effectiveness of the JV is subject to regulatory clearances and other customary closing conditions. In addition, the JV cannot become effective prior to the first business day of the month after the "Trigger Date" which is the date on which GE and its affiliates cease to own more than 50% of the voting power of BHGE’s outstanding common stock. These jet engine aero-derivative products are mainly used in our LNG, onshore-offshore production, pipeline and industrial segments within our Turbomachinery & Process Solutions segment and by GE in its power generation business. GE and we will contribute certain assets, inventory and service facilities into the JV and both companies will jointly control operations. In addition to the contributions to the JV, we agreed to pay $60 million to GE, in order to equalize each party's interests in the JV at 50%. The JV will have a supply and technology development agreement with GE’s aviation business (GE Aviation), which will revise and extend pricing arrangements as compared to BHGE’s existing supply agreement, and which will become effective at the Trigger Date. Additionally, effective May 1, 2019, we closed on the previously announced transfer of our assets, liabilities and employees related to our prior business of developing, designing, engineering, marketing, supplying, installing and servicing certain industrial steam turbine product lines (IST) to GE pursuant to the Stock and Asset Purchase Agreement. In addition and in connection with the transfer of the IST business, we made a cash payment of $13 million, in addition to working capital adjustments, to GE at the closing of the transaction. In parallel, we have also entered into an agreement for the long-term supply and related distribution arrangement with GE for heavy-duty gas turbine technology at the current pricing levels, which will become effective at the Trigger Date. Under this agreement BHGE LLC will be appointed as GE's exclusive distributor (with limited exceptions) within the oil and gas industry with respect to the heavy-duty gas turbine units for an initial term of 5 years and associated services (including parts and components) for an initial term of 20 years or the operating service life of the relevant gas turbine, whichever is more. The heavy-duty gas turbine technologies are important components of TPS’ offerings and the long-term agreements provide greater clarity on the commercial approach and customer fulfillment, and will enable us and GE to jointly innovate on leading technology. Preserved access to GE Digital software & technology As part of the Master Agreement Framework, BHGE LLC has agreed with GE Digital to maintain, subject to certain conditions, BHGE LLC's current status as the exclusive reseller of GE Digital offerings in the oil & gas space, and BHGE LLC will continue to source exclusively from GE Digital for certain GE Digital offerings for oil and gas applications. As part of this agreement, BHGE LLC and GE Digital have revised and extended certain pricing arrangements and have established service level obligations. Other key agreements • GE and we agreed to maintain current operations and pricing levels with regards to Control upgrade services we offer through our Digitals Solution segment division for the 4 years commencing on the Trigger Date. • During the second quarter of 2019, GE transferred to BHGE certain UK pension liabilities related to the oil and gas businesses of BHGE and certain specified former oil and gas businesses of GE. The assets associated with these liabilities were also substantially transferred on that date based on a preliminary valuation of the liabilities. On the completion of the final valuation of the liabilities GE will transfer any remaining assets on what is intended to be a fully funded basis (using agreed upon actuarial assumptions). The completion of the final valuation and transfer of remaining assets associated with the UK pension liabilities is expected to be completed in 2019. No liabilities associated with GE’s broad-based U.S. defined benefit pension plan will be transferred to us. • The Tax Matters Agreement with GE that was negotiated at the time of the Transactions will be clarified but otherwise will remain substantially in place and both companies retain the ability to monetize certain tax benefits. • Under the terms of the Master Agreement Framework, the annual intercompany services fee of $55 million that we agreed to pay GE as part of the Transactions is reduced by 50% to $27.5 million per year beginning on January 1, 2019. The Intercompany Services Agreement will terminate 90 days following the Trigger Date (except with respect to certain tools access). In connection with the Master Agreement Framework, BHGE has agreed to terminate certain aspects of the transfer restrictions previously applicable to GE under the Stockholders Agreement, dated as of July 3, 2017, by and between BHGE and GE, as amended from time to time (the Stockholders Agreement). The transfer restrictions prohibited GE from transferring any shares of BHGE's common stock prior to July 3, 2019 (except to its affiliates) without the approval of the Conflicts Committee of BHGE's board of directors. Other provisions of the Stockholders Agreement, including continuing restrictions on certain private transfers of shares of BHGE's common stock by GE, and approval requirements for related party transactions, remain in effect. In addition, the Stockholders Agreement was amended and restated to provide that, following the Trigger Date and until GE and its affiliates own less than 20% of the voting power of BHGE's outstanding common stock, GE shall be entitled to designate one person for nomination to BHGE's board of directors. OTHER RELATED PARTY In connection with the Transactions, on July 3, 2017, we executed a promissory note with GE that represents certain cash that we are holding on GE's behalf due to the restricted nature of the cash. The restriction arises as the majority of the cash cannot be released, transferred or otherwise converted into a non-restricted market currency due to the lack of market liquidity, capital controls or similar monetary or exchange limitations by a Government entity of the jurisdiction in which such cash is situated. There is no maturity date on the promissory note, but we remain obligated to repay GE, therefore, this obligation is reflected as short-term borrowings. As of June 30, 2019, of the $856 million due to GE, $739 million was held in the form of cash and $117 million was held in the form of investment securities. As of December 31, 2018, of the $896 million due to GE, $747 million was held in the form of cash and $149 million was held in the form of investment securities. A corresponding liability is reported in short-term borrowings in the condensed consolidated statements of financial position. Additionally, the Company has $498 million and $538 million of accounts payable at June 30, 2019 and December 31, 2018, respectively, for goods and services provided by GE in the ordinary course of business. The Company has $668 million and $653 million of current receivables at June 30, 2019 and December 31, 2018, respectively, for goods and services provided to GE in the ordinary course of business. Additionally, the Company has $74 million and $93 million of current receivable at June 30, 2019 and December 31, 2018, respectively from BHGE. We also provide guarantees to GE Capital on behalf of some customers who have entered into financing arrangements with GE Capital. TRADE PAYABLES ACCELERATED PAYMENT PROGRAM Our North American operations participate in accounts payable programs with GE Capital. Invoices are settled with vendors per our payment terms to obtain cash discounts. GE Capital provides funding for invoices eligible for a cash discount. Our liability associated with the funded participation in the accounts payable programs, which is presented as accounts payable within the condensed consolidated statements of financial position, was $454 million and $471 million as of June 30, 2019 and December 31, 2018, respectively. On January 16, 2019, GE announced the sale of GE Capital’s accounts payable program platform to a third-party and their intent to start transitioning their existing program to an accounts payable program with that party. As a GE affiliate, we are covered under the agreement.
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES LITIGATION We are subject to a number of lawsuits and claims arising out of the conduct of our business. The ability to predict the ultimate outcome of such matters involves judgments, estimates and inherent uncertainties. We record a liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, including accruals for self-insured losses which are calculated based on historical claim data, specific loss development factors and other information. A range of total possible losses for all litigation matters cannot be reasonably estimated. Based on a consideration of all relevant facts and circumstances, we do not expect the ultimate outcome of currently pending lawsuits or claims against us, other than those discussed below, will have a material adverse effect on our financial position, results of operations or cash flows, however, there can be no assurance as to the ultimate outcome of these matters. With respect to the litigation matters below, if there was an adverse outcome individually or collectively, there could be a material impact on our business, financial condition and results of operations expected for the year. These litigation matters are subject to inherent uncertainties and management's view of these matters may change in the future. Therefore, there can be no assurance as to the ultimate outcome of these matters. During 2014, we received notification from a customer related to a possible equipment failure in a natural gas storage system in Northern Germany, which includes certain of our products. The customer initiated arbitral proceedings against us on June 19, 2015, under the rules of the German Institute of Arbitration e.V. (DIS). On August 3, 2016, the customer amended its claims and alleged damages of €202 million plus interest at an annual rate of prime + 5%. Hearings before the arbitration panel were held January 16, 2017 through January 23, 2017, and March 20, 2017 through March 21, 2017. In addition, on September 21, 2015, TRIUVA Kapitalverwaltungsgesellschaft mbH filed a lawsuit in the United States District Court for the Southern District of Texas, Houston Division against the Company and Baker Hughes Oilfield Operations, Inc. alleging that the plaintiff is the owner of gas storage caverns in Etzel, Germany in which the Company provided certain equipment in connection with the development of the gas storage caverns. The plaintiff further alleges that the Company supplied equipment that was either defectively designed or failed to warn of risks that the equipment posed, and that these alleged defects caused damage to the plaintiff's property. The plaintiff seeks recovery of alleged compensatory and punitive damages of an unspecified amount, in addition to reasonable attorneys' fees, court costs and pre-judgment and post-judgment interest. The allegations in this lawsuit are related to the claims made in the June 19, 2015 German arbitration referenced above. On June 7, 2018, the DIS arbitration panel issued a confidential Arbitration Ruling which addressed all claims asserted by the customer. The estimated financial impact of the Arbitration Ruling has been reflected in the Company's financial statements and did not have a material impact. Further, on March 11, 2019, the customer initiated a second arbitral proceeding against us, under the rules of the German Institute of Arbitration e.V. (DIS). The customer alleged damages of €142 million plus interest at an annual rate of prime + 5% since June 20, 2015. The allegations in this second arbitration proceeding are related to the claims made in the June 19, 2015 German arbitration and Houston Federal Court proceedings referenced above. The Company is vigorously contesting the claims made by TRIUVA in the Houston Federal Court and the claims made by the customer in the 2019 arbitration proceeding. At this time, we are not able to predict the outcome of the claims asserted in the Houston Federal Court or the 2019 arbitration proceeding. On July 31, 2015, Rapid Completions LLC filed a lawsuit in federal court in the Eastern District of Texas against Baker Hughes Incorporated, Baker Hughes Oilfield Operations, Inc., and others claiming infringement of U.S. Patent Nos. 6,907,936; 7,134,505; 7,543,634; 7,861,774; and 8,657,009. On August 6, 2015, Rapid Completions amended its complaint to allege infringement of U.S. Patent No. 9,074,451. On September 17, 2015, Rapid Completions and Packers Plus Energy Services Inc. sued Baker Hughes Canada Company in the Canada Federal Court on the related Canadian patent 2,412,072. On April 1, 2016, Rapid Completions removed U.S. Patent No. 6,907,936 from its claims in the lawsuit. On April 5, 2016, Rapid Completions filed a second lawsuit in federal court in the Eastern District of Texas against Baker Hughes Incorporated, Baker Hughes Oilfield Operations, Inc. and others claiming infringement of U.S. Patent No. 9,303,501. These patents relate primarily to certain specific downhole completions equipment. The plaintiff has requested a permanent injunction against further alleged infringement, damages in an unspecified amount, supplemental and enhanced damages, and additional relief such as attorney's fees and costs. During August and September 2016, the United States Patent and Trademark Office (USPTO) agreed to institute an inter-partes review of U.S. Patent Nos 7,861,774; 7,134,505; 7,543,634; 6,907,936; 8,657,009; and 9,074,451. On August 29, 2017, the USPTO issued its final written decisions in the inter-partes reviews of U.S. Patent Nos. 8,657,009 and 9,074,451 finding that all claims of those patents were unpatentable. On August 31, 2017, the USPTO issued its final written decision in the inter-partes review of U.S. Patent 6,907,936 - the patent dropped from the lawsuit by the plaintiffs - finding that all claims of this patent were patentable. On October 27, 2017, Rapid Completions filed its notices of appeal of the USPTO’s final written decision in the inter-partes review of U.S. Patent Nos. 8,657,009 and 9,074,451. On September 26, 2018, the USPTO issued its final written decision in the inter-partes review of U.S. Patent No. 7,134,505 finding all of the challenged claims unpatentable. On September 27, 2018, the USPTO issued its final written decision in the inter-partes review of U.S. Patent No. 7,543,634 finding all of the challenged claims unpatentable. Trial on the validity of asserted claims from Canada patent 2,412,072, was completed March 9, 2017. On December 7, 2017, the Canadian Court issued its judgment finding the patent claims asserted from Canada patent 2,412,072 against Baker Hughes Canada Company were invalid. On January 5, 2018, Rapid Completions filed its Notice of Appeal of the Canadian Court’s judgment of invalidity. On November 19, 2018, the U.S. Court of Appeals for the Federal Circuit affirmed the USPTO’s unpatentability findings with respect to U.S. Patent Nos. 8,657,009 and 9,074,451. On November 26, 2018, Rapid Completions filed notices of appeal of the USPTO’s final written decisions in the inter partes reviews of U.S. Patent No. 7,134,505, and 7,543,634. On April 24, 2019, the Canadian Court of Appeals ruled against Rapid Completions and dismissed Rapid Completion’s appeal in Canada. On June 24, 2019, Rapid Completions filed an application for leave to appeal the Court of Appeals decision to the Supreme Court of Canada. On May 2, 2019, the USPTO issued a final written decision in an IPR on US Patent Number 9,303,501 finding all of its claims unpatentable, and Rapid Completions appealed that decision to the Federal Circuit on July 5, 2019. The remaining appeals of the USPTO decisions finding Rapid Completion’s U.S. Patent claims unpatentable are still pending and, at this time, we are not able to predict the outcome of these claims. In January 2013, INEOS and Naphtachimie initiated expertise proceedings in Aix-en-Provence, France arising out of a fire at a chemical plant owned by INEOS in Lavera, France, which resulted in a 15-day plant shutdown and destruction of a steam turbine, which was part of a compressor train owned by Naphtachimie. The most recent quantification of the alleged damages is €250 million. Two of the Company's subsidiaries (and 17 other companies) were notified to participate in the proceedings. The proceedings are ongoing, and at this time, there is no indication that the Company's subsidiaries were involved in the incident. Although the outcome of the claims remains uncertain, BHGE's insurer has accepted coverage and is defending the Company in the expertise proceeding. In late November 2017, staff of the Boston office of the SEC notified GE that they are conducting an investigation of GE’s revenue recognition practices and internal controls over financial reporting related to long-term service agreements. The scope of the SEC’s request may include some BHGE contracts, expected to be mainly in our TPS business. We have provided documents to GE and are cooperating with them in their response to the SEC. At this time, we are not able to predict the outcome of this review. On July 31, 2018, International Engineering & Construction S.A. (IEC) initiated arbitration proceedings in New York administered by the International Center for Dispute Resolution (ICDR) against the Company and its subsidiaries arising out of a series of sales and service contracts entered between IEC and the Company’s subsidiaries for the sale and installation of LNG plants and related power generation equipment in Nigeria (Contracts). Prior to the filing of the IEC Arbitration, the Company’s subsidiaries made demands for payment due under the Contracts. On August 15, 2018, the Company’s subsidiaries initiated a separate demand for ICDR arbitration against IEC for claims of additional costs and amounts due under the Contracts. On October 10, 2018, IEC filed a Petition to Compel Arbitration in the United States District Court for the Southern District of New York against the Company seeking to compel non-signatory BHGE entities to participate in the arbitration filed by IEC. The complaint is captioned International Engineering & Construction S.A. et al. v. Baker Hughes, a GE Company LLC, et al. No. 18-cv-09241 (S.D.N.Y 2018). IEC alleges breach of contract and other claims against the Company and its subsidiaries and seeks recovery of alleged compensatory damages, in addition to reasonable attorneys' fees, expenses and arbitration costs. On March 15, 2019, IEC amended its request for arbitration to alleged damages of $591 million of lost profits plus unspecified additional costs based on alleged non-performance of the contracts in dispute. The arbitration hearing is currently scheduled to commence on December 9, 2019. The Company and its subsidiaries have vigorously contested IEC’s claims and are pursuing claims for compensation under the contracts. At this time, we are not able to predict the outcome of these claims. On March 15, 2019 and March 18, 2019, the City of Riviera Beach Pension Fund and Richard Schippnick, respectively, filed in the Delaware Court of Chancery shareholder derivative lawsuits for and on BHGE's behalf against GE, the current members of the Board of Directors of BHGE and BHGE as a nominal defendant, related to the decision to (i) terminate the contractual prohibition barring GE from selling any of BHGE's shares before July 3, 2019; (ii) repurchase $1.5 billion in BHGE's stock from GE; (iii) permit GE to sell approximately $2.5 billion in BHGE's stock through a secondary offering; and (iv) enter into a series of other agreements and amendments that will govern the ongoing relationship between BHGE and GE (collectively, the “2018 Transactions”). The complaints in both lawsuits allege, among other things, that GE, as BHGE's controlling stockholder, and the members of BHGE's Board of Directors breached their fiduciary duties by entering into the 2018 Transactions. The relief sought in the complaints includes a request for a declaration that the defendants breached their fiduciary duties, that GE was unjustly enriched, disgorgement of profits, an award of damages sustained by BHGE, pre- and post-judgment interest, and attorneys’ fees and costs. On March 21, 2019, the Chancery Court entered an order consolidating the Schippnick and City of Riviera Beach complaints under consolidated C.A. No. 2019-0201-AGB, styled in re Baker Hughes, a GE company derivative litigation. On May 10, 2019, Plaintiffs voluntarily dismissed their claims against the members of BHGE's Conflicts Committee, and on May 15, 2019, Plaintiffs voluntarily dismissed their claims against former BHGE's director Martin Craighead. At this time, we are not able to predict the outcome of these claims. In March 2019, BHGE received a document request from the United States Department of Justice (the “DOJ”) related to certain of the Company’s operations in Iraq and its dealings with Unaoil Limited and its affiliates. BHGE and the Company are cooperating with the DOJ in connection with this request and any related matters. In addition, BHGE has agreed to toll any statute of limitations in connection with the matters subject to the DOJ’s document request until December 2019. On May 7, 2019, the Alaska District Attorney filed a Criminal Information against Baker Hughes Incorporated, Baker Hughes Oilfield Operations, Inc., Baker Petrolite Corporation and a Baker Hughes employee alleging that individuals working at a Baker Petrolite Corporation chemical transfer facility in Kenai, Alaska were exposed to hazardous air emissions. The Criminal Information charges six counts of Assault in the Third Degree, three counts of Assault in the Fourth Degree and Negligent Air Emissions. On July 22, 2019, the six counts of Assault in the Third Degree were dismissed, with the Alaska Attorney General’s office indicating their intent to present those charges to the grand jury to obtain an indictment. The Company and other Defendants have pled not guilty and intend to vigorously defend the charges. At this time, we are not able to predict the outcome of the criminal proceeding. We insure against risks arising from our business to the extent deemed prudent by our management and to the extent insurance is available, but no assurance can be given that the nature and amount of that insurance will be sufficient to fully indemnify us against liabilities arising out of pending or future legal proceedings or other claims. Most of our insurance policies contain deductibles or self-insured retentions in amounts we deem prudent and for which we are responsible for payment. In determining the amount of self-insurance, it is our policy to self-insure those losses that are predictable, measurable and recurring in nature, such as claims for automobile liability, general liability and workers compensation. PRODUCT WARRANTIES We provide for estimated product warranty expenses when we sell the related products. Because warranty estimates are forecasts that are based on the best available information, primarily historical claims experience, claims costs may differ from amounts provided. An analysis of changes in the liability for product warranties are as follows:
OTHER In the normal course of business with customers, vendors and others, we have entered into off-balance sheet arrangements, such as surety bonds for performance, letters of credit and other bank issued guarantees, which totaled approximately $3.8 billion at June 30, 2019. It is not practicable to estimate the fair value of these financial instruments. None of the off-balance sheet arrangements either has, or is likely to have, a material effect on our financial position, results of operations or cash flows.
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Restructuring, Impairment and Other |
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring, Impairment and Other | RESTRUCTURING, IMPAIRMENT AND OTHER We recorded restructuring, impairment and other charges of $50 million and $146 million during the three months ended June 30, 2019 and 2018, respectively, and $112 million and $308 million during the six months ended June 30, 2019 and 2018, respectively. Details of these charges are discussed below. RESTRUCTURING AND IMPAIRMENT CHARGES In the current and prior periods, we approved various restructuring plans globally, mainly to consolidate manufacturing and service facilities, rationalize product lines and rooftops, and reduce headcount across various functions. As a result, we recognized a charge of $45 million and $68 million for the three months ended June 30, 2019 and 2018, respectively, and $107 million and $193 million for the six months ended June 30, 2019 and 2018, respectively. These restructuring initiatives will generate charges post June 30, 2019, and the related estimated remaining charges are approximately $54 million. The amount of costs not included in the reported segment results is as follows:
These costs were primarily related to employee termination benefits, product line terminations, plant closures and related expenses such as property, plant and equipment impairments, contract terminations and costs of assets', and other incremental costs that were a direct result of the restructuring plans.
OTHER CHARGES Other charges included in "Restructuring, impairment and other" of the condensed consolidated statements of income (loss) were $5 million and $78 million for the three months ended June 30, 2019 and 2018, respectively, and $5 million and $115 million for the six months ended June 30, 2019 and 2018, respectively. For the three and six months ended June 30, 2018 such charges relate primarily to accelerated amortization for certain trade names, and technology in our Oilfield Services segment.
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Assets and Liabilities of Business Held for Sale |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities of Business Held for Sale | ASSETS AND LIABILITIES OF BUSINESS HELD FOR SALE On June 30, 2019, we entered into an agreement to sell our high-speed reciprocating compression (Recip) business for a total consideration of $80 million. Recip, based in Houston, Texas, is part of our TPS segment and provides high-speed reciprocating compression equipment and aftermarket parts and services for oil and gas production, gas processing, gas distribution and independent power industries. As of June 30, 2019, the disposal group met the criteria to be classified as held for sale and was measured and reported at the lower of carrying amount and fair value less costs to sell by recognizing a valuation allowance. The transaction is expected to close later this year subject to customary regulatory approval. The following table presents financial information related to the assets and liabilities of the Recip business that was classified as held for sale and reported in “All other current assets” and “All other current liabilities” in our condensed consolidated statement of financial position as of June 30, 2019:
(1) Valuation allowance on disposal group classified as held for sale is recorded in Other non operating income (loss), net in our condensed consolidated statements of income (loss) and includes costs associated with selling the business of $11 million.
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Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
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Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION In connection with the Transactions, we entered into and are governed by an Amended & Restated Limited Liability Company Agreement, dated as of July 3, 2017 (the BHGE LLC Agreement). Under the BHGE LLC Agreement, EHHC Newco, LLC (EHHC), a wholly owned subsidiary of BHGE, is our sole managing member and BHGE is the sole managing member of EHHC. As our managing member, EHHC conducts, directs and exercises full control over all our activities, including our day-to-day business affairs and decision-making, without the approval of any other member. As such, EHHC is responsible for all our operational and administrative decisions and the day-to-day management of our business. The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. and such principles, U.S. GAAP) and pursuant to the rules and regulations of the SEC for interim financial information. Accordingly, certain information and disclosures normally included in our annual financial statements have been condensed or omitted. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated and combined financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018 (2018 Annual Report). In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary by management to fairly state our results of operations, financial position and cash flows of the Company and its subsidiaries for the periods presented and are not indicative of the results that may be expected for a full year. The Company's financial statements have been prepared on a consolidated basis. Under this basis of presentation, our financial statements consolidate all of our subsidiaries (entities in which we have a controlling financial interest, most often because we hold a majority voting interest). All intercompany accounts and transactions have been eliminated. In the Company's financial statements and notes, certain amounts have been reclassified to conform with the current year presentation. In the notes to unaudited condensed consolidated financial statements, all dollar and unit amounts in tabulations are in millions of dollars and units, respectively, unless otherwise indicated. Certain columns and rows in our financial statements and notes thereto may not add due to the use of rounded numbers. In June 2018, GE announced their intention to pursue an orderly separation from BHGE over time. In the three and six months ended June 30, 2019, separation and merger related costs include primarily costs incurred in connection with the finalization of the Master Agreement Framework and costs related to the anticipated separation from GE. In the three and six months ended June 30, 2018, separation and merger related costs are comprised solely of costs associated with the Transactions. See "Note 15. Related Party Transactions" for further information on the Master Agreement Framework. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Please refer to "Note 1. Basis of Presentation and Summary of Significant Accounting Policies," to our consolidated financial statements from our 2018 Annual Report for the discussion of our significant accounting policies. Please refer to the "New Accounting Standards Adopted" section of this Note for changes to our accounting policies.
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Cash and Cash Equivalents | Cash and Cash Equivalents As of June 30, 2019 and December 31, 2018, we had $1,267 million and $1,208 million, respectively, of cash held in bank accounts that cannot be released, transferred or otherwise converted into a currency that is regularly transacted internationally, due to lack of market liquidity, capital controls or similar monetary or exchange limitations limiting the flow of capital out of the jurisdiction. These funds are available to fund operations and growth in these jurisdictions, and we do not currently anticipate a need to transfer these funds to the U.S. Included in these amounts are $429 million and $461 million, as of June 30, 2019 and December 31, 2018, respectively, held on behalf of GE. Cash and cash equivalents includes a total of $739 million and $747 million of cash at June 30, 2019 and December 31, 2018, respectively, held on behalf of GE, and a corresponding liability is reported in short-term borrowings. See "Note 15. Related Party Transactions" for further details.
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New Accounting Standards Adopted and To Be Adopted | NEW ACCOUNTING STANDARDS ADOPTED Leases On January 1, 2019, we adopted Accounting Standards Update (ASU) No. 2016-02, Leases, and the related amendments (ASC 842). This ASU requires lessees to recognize an operating lease asset and a lease liability on the balance sheet, with the exception of short-term leases. We adopted the standard using the modified retrospective approach under which leases existing at, or entered into after January 1, 2019 were required to be recognized and measured. Prior period amounts have not been adjusted and continue to be reflected in accordance with our historical accounting. The Company has elected the practical expedients upon transition that allow entities not to reassess lease identification, classification and initial direct costs for leases that existed prior to adoption. The most significant impact of the standard is the recognition of right-of-use (ROU) assets and operating lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. We implemented internal controls and key system functionality to enable the preparation of financial information on adoption. We determine if an arrangement is a lease at inception. ROU assets are included in "All other assets" and operating lease liabilities are included in "All other current liabilities" and "All other liabilities" on our consolidated statement of financial position. Finance lease assets are included in "Property, plant and equipment," and finance lease liabilities are included in "Short-term debt," and "Long-term debt" on our consolidated statement of financial position. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at the later of the lease commencement date or the effective date of adoption of ASC 842 on January 1, 2019, based on the present value of lease payments over the remaining lease term. Finance lease ROU assets and liabilities are recognized at commencement date. As most of our leases do not provide an implicit rate, we use our incremental collateralized borrowing rate based on the information available at commencement date in determining the present value of lease payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Short-term leases under one year do not result in a ROU asset, but are recognized in the income statement only on a straight-line basis over the lease term. The Company has made an election to include within our operating lease liability future payments for both lease and non-lease components. See "Note 8. Leases" for additional information. The adoption of this standard resulted in the recording of ROU assets and operating lease liabilities of $844 million as of January 1, 2019 on our consolidated statements of financial position with an immaterial impact on our consolidated statements of equity and no related impact on our consolidated statements of income (loss). Short-term leases have not been recorded on the consolidated statements of financial position. Our accounting for finance leases remained substantially unchanged. Derivatives and Hedging On January 1, 2019, we adopted ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. Since there was no impact from the new guidance to our consolidated financial statements, no transition adjustments were recorded. ASU 2017-12 simplifies the application of hedge accounting and expands the strategies that qualify for hedge accounting. In accordance with the ASU, both the effective and ineffective portion of a cash flow hedge are initially reported as a component of accumulated other comprehensive income (loss) and reclassified into earnings when the forecasted transaction affects earnings. The ASU requires certain changes to the presentation of hedge accounting in the financial statements and some new or modified disclosures. See "Note 13. Financial Instruments" for additional information. NEW ACCOUNTING STANDARDS TO BE ADOPTED In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses. The ASU introduces a new accounting model, the Current Expected Credit Losses model (CECL), which requires earlier recognition of credit losses and additional disclosures related to credit risk. The CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses for loans and other receivables at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. This model replaces the multiple existing impairment models in current U.S. GAAP, which generally require that a loss be incurred before it is recognized. The new standard will also apply to receivables arising from revenue transactions such as contract assets and accounts receivables and is effective for fiscal years beginning after December 15, 2019. We continue to evaluate the effect of the standard on our consolidated financial statements. All other new accounting pronouncements that have been issued but not yet effective are currently being evaluated and at this time are not expected to have a material impact on our financial position or results of operations.
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Fair Value Measurements | The most significant unobservable input used in the valuation of our Level 3 instruments is the discount rate. Discount rates are determined based on inputs that market participants would use when pricing investments, including credit and liquidity risk. An increase in the discount rate would result in a decrease in the fair value of our investment securities. |
Revenue Related to Contracts with Customers (Tables) |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregated revenue from contracts with customers by primary geographical markets | We disaggregate our revenue from contracts with customers by primary geographic markets.
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Current Receivables (Tables) |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current receivables | Current receivables are comprised of the following:
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Inventories (Tables) |
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Inventory, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Inventories, net of reserves | Inventories, net of reserves of $416 million and $430 million as of June 30, 2019 and December 31, 2018, respectively, are comprised of the following:
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Goodwill and Other Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill | The changes in the carrying value of goodwill are detailed below by segment:
(1) Includes the final determination of fair value of the assets and liabilities and the related goodwill associated with the acquisition of Baker Hughes that was concluded in the second quarter of 2018. Of the total goodwill of $13,669 million resulting from the acquisition of Baker Hughes, $12,604 million is allocated to our Oilfield Services segment and the remainder to our other segments based on the expected benefit from the synergies of the acquisition.
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Schedule of finite-lived intangible assets | Intangible assets are comprised of the following:
(1) Indefinite-lived intangible assets are principally comprised of the Baker Hughes trade name.
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Schedule of indefinite-lived intangible assets | Intangible assets are comprised of the following:
(1) Indefinite-lived intangible assets are principally comprised of the Baker Hughes trade name.
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Schedule of finite-lived intangible assets, future amortization expense | Estimated amortization expense for the remainder of 2019 and each of the subsequent five fiscal years is expected to be as follows:
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Contract and Other Deferred Assets (Tables) |
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Deferred Revenue Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract assets | Contract assets are comprised of the following:
(3) Deferred inventory costs were $360 million as of January 1, 2018, which represents cost deferral for shipped goods and other costs where the criteria for revenue recognition has not yet been met. Contract liabilities are comprised of the following:
(1) Progress collections and deferred income (contract liabilities) were $1,775 million at January 1, 2018.
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Progress Collections and Deferred Income (Tables) |
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Revenue Recognition and Deferred Revenue [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract liabilities | Contract assets are comprised of the following:
(3) Deferred inventory costs were $360 million as of January 1, 2018, which represents cost deferral for shipped goods and other costs where the criteria for revenue recognition has not yet been met. Contract liabilities are comprised of the following:
(1) Progress collections and deferred income (contract liabilities) were $1,775 million at January 1, 2018.
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Leases (Tables) |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of operating lease expense | Our leasing activities primarily consist of operating leases for administrative offices, manufacturing facilities, research centers, service centers, sales offices and certain equipment.
(1) Includes leases with a term of one month or less
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Maturities of lease liabilities, operating leases | As of June 30, 2019, maturities of our operating lease liabilities are as follows:
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Schedule of liabilities | Amounts recognized in the condensed consolidated statement of financial position as of June 30, 2019:
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Borrowings (Tables) |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term and long-term borrowings | Short-term and long-term borrowings are comprised of the following:
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Employee Benefit Plans (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of net periodic cost (benefit) | The components of net periodic cost (benefit) of plans sponsored by us are as follows for the three and six months ended June 30:
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Members' Equity (Tables) |
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Partners' Capital Notes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in number of shares outstanding | The following table presents the changes in the number of units outstanding (in thousands):
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Schedule of accumulated other comprehensive loss | The following tables present the changes in accumulated other comprehensive loss, net of tax:
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Financial Instruments (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and liabilities measured at fair value on a recurring basis | Our assets and liabilities measured at fair value on a recurring basis consists of derivative instruments and investment securities.
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Reconciliation of recurring Level 3 fair value measurements | The following table provides a reconciliation of recurring Level 3 fair value measurements for investment securities:
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Schedule of investment securities classified as available for sale |
(2) Gains (losses) recorded to earnings related to these securities were $(9) million and $11 million for the three months ended June 30, 2019 and 2018, respectively, and $1 million and $(3) million for the six months ended June 30, 2019 and 2018, respectively.
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Schedule of derivatives | The table below summarizes the fair value of all derivatives, including hedging instruments and embedded derivatives.
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Schedule of hedging instrument, currency exchange contract | The table below summarizes this activity by hedging instrument.
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Schedule of gains (losses) from derivatives not designated as hedges | The following table summarizes the gains (losses) from derivatives not designated as hedges on the condensed consolidated statements of income (loss).
(2) The effect on earnings of derivatives not designated as hedges is substantially offset by change in fair value of the economically hedged items in the current and future periods.
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Segment Information (Tables) |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summarized financial information | Summarized financial information is shown in the following tables. Consistent accounting policies have been applied by all segments within the Company, for all reporting periods.
The performance of our operating segments is evaluated based on segment operating income (loss), which is defined as income (loss) before income taxes and equity in loss of affiliate and before the following: net interest expense, net other non operating income (loss), corporate expenses, restructuring, impairment and other charges, inventory impairments, separation and merger related costs and certain gains and losses not allocated to the operating segments.
(1) Charges for inventory impairments are reported in the "Cost of goods sold" caption of the condensed consolidated statements of income (loss).
|
Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of product warranties | An analysis of changes in the liability for product warranties are as follows:
|
Restructuring, Impairment and Other (Tables) |
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment and restructuring charges | The amount of costs not included in the reported segment results is as follows:
These costs were primarily related to employee termination benefits, product line terminations, plant closures and related expenses such as property, plant and equipment impairments, contract terminations and costs of assets', and other incremental costs that were a direct result of the restructuring plans.
|
Assets and Liabilities of Business Held for Sale (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets and liabilities of business held for sale | The following table presents financial information related to the assets and liabilities of the Recip business that was classified as held for sale and reported in “All other current assets” and “All other current liabilities” in our condensed consolidated statement of financial position as of June 30, 2019:
(1) Valuation allowance on disposal group classified as held for sale is recorded in Other non operating income (loss), net in our condensed consolidated statements of income (loss) and includes costs associated with selling the business of $11 million.
|
Basis of Presentation and Summary of Significant Accounting Policies (Details) employee in Thousands, $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2019
USD ($)
employee
country
|
Dec. 31, 2018
USD ($)
|
|
Business Acquisition [Line Items] | ||
Countries in which our business is conducted (more than) | country | 120 | |
Number of our employees | employee | 67 | |
Restricted cash and cash equivalents held in bank accounts | $ 1,267 | $ 1,208 |
General Electric Company | ||
Business Acquisition [Line Items] | ||
Restricted cash and cash equivalents held in bank accounts | 429 | 461 |
Related party amount, due to related party | GE | ||
Business Acquisition [Line Items] | ||
Cash | $ 739 | $ 747 |
BHGE LLC | BHGE | ||
Business Acquisition [Line Items] | ||
Approximate interest | 49.70% | |
BHGE LLC | General Electric Company | ||
Business Acquisition [Line Items] | ||
Approximate interest | 50.30% |
Basis of Presentation and Summary of Significant Accounting Policies - New Accounting Policy (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Jan. 01, 2019 |
---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease, liability | $ 831 | |
ASU 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right of use asset | $ 844 | |
Operating lease, liability | $ 844 |
Revenue Related to Contracts with Customers - Disaggregated Revenue (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 5,994 | $ 5,548 | $ 11,608 | $ 10,947 |
U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,616 | 1,560 | 3,121 | 3,043 |
Non-U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 4,378 | $ 3,988 | $ 8,487 | $ 7,904 |
Revenue Related to Contracts with Customers - Performance Obligation - Revenue Recognized (Details) - USD ($) $ in Billions |
Jun. 30, 2019 |
Jun. 30, 2018 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Performance obligation expected to be satisfied | $ 20.6 | $ 20.9 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Performance obligations expected to be satisfied, percent | 47.00% | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Performance obligations expected to be satisfied, percent | 16.00% | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Performance obligations expected to be satisfied, percent | 26.00% | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2034-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Performance obligations expected to be satisfied, percent | 11.00% |
Revenue Related to Contracts with Customers - Performance Obligation - Performance Period (Details) |
Jun. 30, 2019 |
---|---|
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied, expected timing | 2 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-07-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied, expected timing | 3 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied, expected timing | 10 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2034-07-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied, expected timing |
Current Receivables (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total current receivables | $ 6,717 | $ 6,389 |
Less: Allowance for doubtful accounts | (333) | (327) |
Total current receivables, net | 6,384 | 6,062 |
Customer receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total current receivables | 5,245 | 4,974 |
Related parties | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total current receivables | 742 | 746 |
Other | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total current receivables | $ 730 | $ 669 |
Inventories (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Inventory, Net [Abstract] | ||
Inventory valuation reserves | $ 416 | $ 430 |
Finished goods | 2,751 | 2,575 |
Work in process and raw material | 2,056 | 2,045 |
Total inventories, net | $ 4,807 | $ 4,620 |
Goodwill and Other Intangible Assets - Schedule of Goodwill (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Goodwill [Line Items] | ||||
Balance at December 31, 2017, gross | $ 23,408 | |||
Accumulated impairment | (3,754) | |||
Goodwill [Roll Forward] | ||||
Goodwill, net, beginning balance | $ 20,423 | $ 19,654 | ||
Purchase accounting adjustments | 959 | |||
Currency exchange and others | (12) | (190) | ||
Goodwill, net, ending balance | 20,411 | 20,423 | ||
GE Transaction Agreement | ||||
Goodwill [Roll Forward] | ||||
Goodwill, acquisition | $ 13,669 | |||
Oilfield Services | ||||
Goodwill [Line Items] | ||||
Balance at December 31, 2017, gross | 15,565 | |||
Accumulated impairment | (2,633) | |||
Goodwill [Roll Forward] | ||||
Goodwill, net, beginning balance | 12,749 | 12,932 | ||
Purchase accounting adjustments | (157) | |||
Currency exchange and others | 0 | (26) | ||
Goodwill, net, ending balance | 12,749 | 12,749 | ||
Oilfield Services | GE Transaction Agreement | ||||
Goodwill [Roll Forward] | ||||
Goodwill, acquisition | $ 12,604 | |||
Oilfield Equipment | ||||
Goodwill [Line Items] | ||||
Balance at December 31, 2017, gross | 3,901 | |||
Accumulated impairment | (867) | |||
Goodwill [Roll Forward] | ||||
Goodwill, net, beginning balance | 3,310 | 3,034 | ||
Purchase accounting adjustments | 293 | |||
Currency exchange and others | 0 | (17) | ||
Goodwill, net, ending balance | 3,310 | 3,310 | ||
Turbomachinery & Process Solutions | ||||
Goodwill [Line Items] | ||||
Balance at December 31, 2017, gross | 1,906 | |||
Accumulated impairment | 0 | |||
Goodwill [Roll Forward] | ||||
Goodwill, net, beginning balance | 2,186 | 1,906 | ||
Purchase accounting adjustments | 394 | |||
Currency exchange and others | (13) | (114) | ||
Goodwill, net, ending balance | 2,173 | 2,186 | ||
Digital Solutions | ||||
Goodwill [Line Items] | ||||
Balance at December 31, 2017, gross | 2,036 | |||
Accumulated impairment | $ (254) | |||
Goodwill [Roll Forward] | ||||
Goodwill, net, beginning balance | 2,178 | 1,782 | ||
Purchase accounting adjustments | 429 | |||
Currency exchange and others | 1 | (33) | ||
Goodwill, net, ending balance | $ 2,179 | $ 2,178 |
Goodwill and Other Intangible Assets - Narrative (Details) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2019
USD ($)
segment
|
Jun. 30, 2018
USD ($)
|
Jul. 01, 2018 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Number of reportable segments | segment | 4 | ||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization expense for intangible assets included in net income | $ | $ 97 | $ 101 | $ 193 | $ 240 | |
Minimum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Estimated useful lives | 1 year | ||||
Maximum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Estimated useful lives | 30 years | ||||
Oilfield Services (OFS) and Oilfield Equipment (OFE) | Minimum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Reporting unit, percentage of fair value in excess of carrying value | 15.00% | ||||
Oilfield Services (OFS) and Oilfield Equipment (OFE) | Maximum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Reporting unit, percentage of fair value in excess of carrying value | 20.00% |
Goodwill and Other Intangible Assets - Schedule of Intangible Assets by Type (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Finite-Lived Intangible Assets, Net [Abstract] | ||
Finite-lived intangible assets, gross | $ 5,945 | $ 6,022 |
Finite-lived intangible assets, accumulated amortization | (2,677) | (2,525) |
Finite-lived intangible assets, net | 3,268 | 3,497 |
Indefinite-lived intangible assets | 2,242 | 2,222 |
Intangible assets, gross | 8,187 | 8,244 |
Other intangible assets, net | 5,510 | 5,719 |
Trade names and trademarks | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Finite-lived intangible assets, gross | 3,022 | 3,085 |
Finite-lived intangible assets, accumulated amortization | (985) | (944) |
Finite-lived intangible assets, net | 2,037 | 2,141 |
Technology | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Finite-lived intangible assets, gross | 1,069 | 1,107 |
Finite-lived intangible assets, accumulated amortization | (572) | (526) |
Finite-lived intangible assets, net | 497 | 581 |
Trade names and trademarks | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Finite-lived intangible assets, gross | 691 | 698 |
Finite-lived intangible assets, accumulated amortization | (240) | (229) |
Finite-lived intangible assets, net | 451 | 469 |
Capitalized software | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Finite-lived intangible assets, gross | 1,162 | 1,118 |
Finite-lived intangible assets, accumulated amortization | (879) | (824) |
Finite-lived intangible assets, net | 283 | 294 |
Other | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Finite-lived intangible assets, gross | 1 | 14 |
Finite-lived intangible assets, accumulated amortization | (1) | (2) |
Finite-lived intangible assets, net | $ 0 | $ 12 |
Goodwill and Other Intangible Assets - Schedule of Future Estimated Amortization Expense (Details) $ in Millions |
Jun. 30, 2019
USD ($)
|
---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
Remainder of 2019 | $ 169 |
2020 | 323 |
2021 | 280 |
2022 | 240 |
2023 | 226 |
2024 | $ 221 |
Contract and Other Deferred Assets (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
Jan. 01, 2018 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Contract assets (revenue in excess of billings) | $ 1,677 | $ 1,677 | $ 1,694 | $ 1,684 | ||
Deferred inventory costs | 129 | 129 | 179 | $ 360 | ||
Non-recurring engineering costs | 43 | 43 | 21 | |||
Contract and other deferred assets | 1,849 | 1,849 | 1,894 | |||
Revenue recognized from performance obligations satisfied in previous periods | 14 | $ 12 | 21 | $ 22 | ||
Long-term product service agreements | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Contract assets (revenue in excess of billings) | 608 | 608 | 609 | |||
Long-term equipment contracts | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Contract assets (revenue in excess of billings) | $ 1,069 | $ 1,069 | $ 1,085 |
Progress Collections and Deferred Income (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
Jan. 01, 2018 |
|
Disaggregation of Revenue [Line Items] | ||||||
Progress collections and deferred income (contract liabilities) | $ 2,214 | $ 2,214 | $ 1,765 | $ 1,775 | ||
Revenue recognized, included in contract liability | 295 | $ 404 | 848 | $ 1,006 | ||
Progress collections | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Progress collections and deferred income (contract liabilities) | 2,088 | 2,088 | 1,600 | |||
Deferred income | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Progress collections and deferred income (contract liabilities) | $ 126 | $ 126 | $ 165 |
Leases - Operating Lease Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
|
Operating Lease Expense | |||
Long-term fixed lease | $ 60 | $ 108 | |
Long-term variable lease | 13 | 24 | |
Short-term lease | 177 | 342 | |
Total operating lease expense | $ 250 | $ 188 | $ 474 |
Leases - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Leases [Abstract] | ||||
Operating lease expense | $ 250 | $ 188 | $ 474 | |
Operating lease expense | $ 375 | |||
Lessee, Lease, Description [Line Items] | ||||
Operating lease, weighted-average remaining lease term | 9 years | 9 years | ||
Operating lease, weighted-average discount rate | 4.40% | 4.40% | ||
All other assets | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease assets | $ 821 | $ 821 |
Leases - Operating Lease Liabilities (Details) $ in Millions |
Jun. 30, 2019
USD ($)
|
---|---|
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
Remainder of 2019 | $ 112 |
2020 | 198 |
2021 | 144 |
2022 | 117 |
2023 | 82 |
Thereafter | 379 |
Total lease payments | 1,032 |
Less: imputed interest | 201 |
Total | $ 831 |
Leases - Lease Liabilities Statement of Financial Position (Details) $ in Millions |
Jun. 30, 2019
USD ($)
|
---|---|
Operating Leases | |
All other current liabilities | $ 190 |
All other liabilities | 641 |
Total | $ 831 |
Borrowings - Short-term and Long-term Borrowings (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
||
---|---|---|---|---|
Short-term borrowings | ||||
Total short-term borrowings | [1] | $ 892 | $ 942 | |
Long-term borrowings | ||||
Other long-term borrowings | 85 | 107 | ||
Total long-term borrowings | 6,256 | 6,285 | ||
Total borrowings | $ 7,148 | 7,227 | ||
3.2% Senior Notes due August 2021 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 3.20% | |||
2.773% Senior Notes due December 2022 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 2.773% | |||
8.55% Debentures due June 2024 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 8.55% | |||
3.337% Senior Notes due December 2027 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 3.337% | |||
6.875% Notes due January 2029 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 6.875% | |||
5.125% Senior Notes due September 2040 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 5.125% | |||
4.08% Senior Notes due December 2047 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 4.08% | |||
Senior Notes | 3.2% Senior Notes due August 2021 | ||||
Long-term borrowings | ||||
Long-term borrowings | $ 521 | 523 | ||
Senior Notes | 2.773% Senior Notes due December 2022 | ||||
Long-term borrowings | ||||
Long-term borrowings | 1,246 | 1,245 | ||
Senior Notes | 3.337% Senior Notes due December 2027 | ||||
Long-term borrowings | ||||
Long-term borrowings | 1,343 | 1,343 | ||
Senior Notes | 6.875% Notes due January 2029 | ||||
Long-term borrowings | ||||
Long-term borrowings | 291 | 294 | ||
Senior Notes | 5.125% Senior Notes due September 2040 | ||||
Long-term borrowings | ||||
Long-term borrowings | 1,304 | 1,306 | ||
Senior Notes | 4.08% Senior Notes due December 2047 | ||||
Long-term borrowings | ||||
Long-term borrowings | 1,337 | 1,336 | ||
Debentures | 8.55% Debentures due June 2024 | ||||
Long-term borrowings | ||||
Long-term borrowings | 129 | 131 | ||
Short-term borrowings from GE | ||||
Short-term borrowings | ||||
Total short-term borrowings | 856 | 896 | ||
Other borrowings | ||||
Short-term borrowings | ||||
Total short-term borrowings | $ 36 | $ 46 | ||
|
Borrowings - Narrative (Details) - USD ($) |
Jul. 03, 2017 |
Jun. 30, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Line of Credit Facility [Line Items] | ||||
Estimated fair value of debt | $ 7,132,000,000 | $ 6,629,000,000 | ||
BHGE LLC | 2017 Credit Agreement | Commercial paper | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument, term | 397 days | |||
BHGE LLC | Revolving credit facility | 2017 Credit Agreement | ||||
Line of Credit Facility [Line Items] | ||||
Line of credit facility, maximum borrowing capacity | $ 3,000,000,000 | |||
Long-term borrowings | 0 | 0 | ||
BHGE LLC | Revolving credit facility | 2017 Credit Agreement | Commercial paper | ||||
Line of Credit Facility [Line Items] | ||||
Short-term borrowings | $ 0 | $ 0 | ||
BHGE LLC | Baker Hughes Co-Obligor, Inc. | ||||
Line of Credit Facility [Line Items] | ||||
Ownership percentage | 100.00% | |||
BHGE LLC | Baker Hughes Co-Obligor, Inc. | Senior Notes | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument, face | $ 3,950,000,000 |
Employee Benefit Plans - Narrative (Details) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2019
USD ($)
plan
|
Jun. 30, 2018
USD ($)
|
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Multiemployer plan, contributions by employer | $ | $ 1,000,000 | $ 43,000,000 | $ 3,000,000 | $ 80,000,000 |
Pension Benefits | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Pension assets or obligations, threshold, per plan | $ | $ 20,000,000 | $ 20,000,000 | ||
Pension Benefits | U.S. | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Number of plans | plan | 4 | |||
Pension Benefits | Non-U.S. Pension Benefits | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Number of plans | plan | 6 |
Employee Benefit Plans - Net Period Cost (Details) - Pension Benefits - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Components of net periodic benefit cost [Abstract] | ||||
Service cost | $ 6 | $ 5 | $ 10 | $ 10 |
Interest cost | 22 | 18 | 41 | 36 |
Expected return on plan assets | (30) | (30) | (55) | (60) |
Amortization of net actuarial loss | 5 | 2 | 9 | 4 |
Curtailment loss | 7 | 0 | 7 | 0 |
Net periodic cost (benefit) | $ 10 | $ (5) | $ 12 | $ (10) |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ 95 | $ 62 | $ 162 | $ 100 |
U.S. income tax rate | 21.00% | 21.00% | ||
Effective tax rate | 113.00% | 73.00% | ||
Loss with no tax benefit, valuation allowance | $ 69 | $ 90 |
Members' Equity - Narrative (Details) shares in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2019
shares
| |
BHGE LLC | Common Unitholders | |
Class of Stock [Line Items] | |
Issue of units to BHGE under equity incentive plan (in units) | 2,224 |
Members' Equity - Changes in Number of Shares Outstanding (Details) shares in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2019
shares
| |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |
Beginning balance (in units) | 1,035,000 |
Beginning balance (in units) | 1,037,000 |
Common Unitholders | BHGE LLC | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |
Beginning balance (in units) | 513,399 |
Issue of units to BHGE under equity incentive plan (in units) | 2,224 |
Beginning balance (in units) | 515,624 |
Common Unitholders | General Electric Company | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |
Beginning balance (in units) | 521,543 |
Issue of units to BHGE under equity incentive plan (in units) | 0 |
Beginning balance (in units) | 521,543 |
Members' Equity - Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning Balance | $ 34,966 | $ 37,969 | $ 34,876 | $ 38,396 |
Other comprehensive income (loss) before reclassifications | 2 | (220) | ||
Amounts reclassified from accumulated other comprehensive income (loss) | 14 | 0 | ||
Deferred taxes | 0 | (3) | ||
Other comprehensive income (loss) | (156) | (539) | 16 | (223) |
Less: Other comprehensive loss attributable to noncontrolling interests | (1) | (1) | (1) | (1) |
Other adjustments | (119) | |||
Ending Balance | 34,664 | 36,694 | 34,664 | 36,694 |
Investment Securities, Parent | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning Balance | 0 | 1 | ||
Ending Balance | 1 | (1) | 1 | (1) |
Investment Securities | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Other comprehensive income (loss) before reclassifications | 1 | (1) | ||
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 | ||
Deferred taxes | 0 | (1) | ||
Other comprehensive income (loss) | 1 | (2) | ||
Investment Securities, Noncontrolling Interest | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Less: Other comprehensive loss attributable to noncontrolling interests | 0 | 0 | ||
Other adjustments | 0 | |||
Foreign Currency Translation Adjustment, Parent | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning Balance | (2,326) | (1,824) | ||
Ending Balance | (2,298) | (2,047) | (2,298) | (2,047) |
Foreign Currency Translation Adjustments | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Other comprehensive income (loss) before reclassifications | 27 | (224) | ||
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 | ||
Deferred taxes | 0 | 0 | ||
Other comprehensive income (loss) | 27 | (224) | ||
Foreign Currency Translation Adjustment, Noncontrolling Interest | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Less: Other comprehensive loss attributable to noncontrolling interests | (1) | (1) | ||
Other adjustments | 0 | |||
Cash Flow Hedges, Parent | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning Balance | (3) | 2 | ||
Ending Balance | 3 | 3 | ||
Cash Flow Hedges | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Other comprehensive income (loss) before reclassifications | 1 | 1 | ||
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 | ||
Deferred taxes | 0 | 0 | ||
Other comprehensive income (loss) | 1 | 1 | ||
Cash Flow Hedges, Noncontrolling Interest | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Less: Other comprehensive loss attributable to noncontrolling interests | 0 | 0 | ||
Other adjustments | 0 | |||
Cash Flow Hedges | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Ending Balance | (2) | (2) | ||
Benefit Plans, Parent | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning Balance | (133) | (60) | ||
Ending Balance | (265) | (58) | (265) | (58) |
Benefit Plans | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Other comprehensive income (loss) before reclassifications | (27) | 4 | ||
Amounts reclassified from accumulated other comprehensive income (loss) | 14 | 0 | ||
Deferred taxes | 0 | (2) | ||
Other comprehensive income (loss) | (13) | 2 | ||
Benefit Plans, Noncontrolling Interest | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Less: Other comprehensive loss attributable to noncontrolling interests | 0 | 0 | ||
Other adjustments | (119) | |||
Accumulated Other Comprehensive Loss | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning Balance | (2,290) | (1,565) | (2,462) | (1,881) |
Other comprehensive income (loss) | (155) | (538) | 17 | (222) |
Ending Balance | $ (2,564) | $ (2,103) | $ (2,564) | $ (2,103) |
Financial Instruments - Recurring Fair Value Measurements (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Assets | ||
Investment securities | $ 305 | $ 327 |
Total assets | 47 | 74 |
Liabilities | ||
Total liabilities | (50) | (82) |
Fair value, measurements, recurring | ||
Assets | ||
Derivatives | 47 | 74 |
Investment securities | 305 | 327 |
Total assets | 352 | 401 |
Liabilities | ||
Derivatives | (50) | (82) |
Total liabilities | (50) | (82) |
Fair value, measurements, recurring | Level 1 | ||
Assets | ||
Derivatives | 0 | 0 |
Investment securities | 40 | 39 |
Total assets | 40 | 39 |
Liabilities | ||
Derivatives | 0 | 0 |
Total liabilities | 0 | 0 |
Fair value, measurements, recurring | Level 2 | ||
Assets | ||
Derivatives | 47 | 74 |
Investment securities | 0 | 0 |
Total assets | 47 | 74 |
Liabilities | ||
Derivatives | (50) | (82) |
Total liabilities | (50) | (82) |
Fair value, measurements, recurring | Level 3 | ||
Assets | ||
Derivatives | 0 | 0 |
Investment securities | 265 | 288 |
Total assets | 265 | 288 |
Liabilities | ||
Derivatives | 0 | 0 |
Total liabilities | $ 0 | $ 0 |
Financial Instruments - Reconciliation of Recurring Level 3 Fair Value Measurements (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 288 | $ 304 |
Purchases | 7 | 36 |
Proceeds at maturity | (31) | (30) |
Unrealized gains recognized in AOCI | 1 | 0 |
Ending balance | $ 265 | $ 310 |
Financial Instruments - Narrative (Details) - USD ($) |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2019 |
Dec. 31, 2018 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative, notional amount | $ 5,400,000,000 | $ 6,400,000,000 |
Derivative, notional amount, net | 2,200,000,000 | 2,800,000,000 |
Derivative, transfer to earnings | 2,000,000 | |
All other current assets | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative assets | 42,000,000 | 67,000,000 |
All other assets | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative assets | 5,000,000 | 7,000,000 |
All other current liabilities | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative liability | 47,000,000 | 79,000,000 |
All other liabilities | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative liability | $ 3,000,000 | $ 3,000,000 |
Cash flow hedging | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative, term | 1 year | 2 years |
Level 3 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Unrealized gain (loss) on Level 3 instruments held at reporting date | $ 0 |
Financial Instruments - Investment Securities (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
|
Debt Securities, Available-for-sale [Line Items] | |||||
Investment securities, gross unrealized gains | $ 1 | $ 1 | $ 0 | ||
Investment securities, gross unrealized losses | 0 | 0 | 0 | ||
Equity securities, amortized cost | 40 | 40 | 39 | ||
Equity securities, estimated fair value | 40 | 40 | 39 | ||
Total, amortized cost | 304 | 304 | 327 | ||
Total, estimated fair value | 305 | 305 | 327 | ||
Net unrealized gain (loss) | (9) | $ 11 | 1 | $ (3) | |
Non-U.S. debt securities | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Investment securities, amortized cost | 264 | 264 | 288 | ||
Investment securities, gross unrealized gains | 1 | 1 | 0 | ||
Investment securities, gross unrealized losses | 0 | 0 | 0 | ||
Investment securities | $ 265 | $ 265 | $ 288 | ||
Derivative, term | 4 years |
Financial Instruments - Derivatives and Hedging (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Assets, fair value | $ 47 | $ 74 |
Liabilities, fair value | (50) | (82) |
Designated as hedging instrument | Currency exchange contracts | ||
Derivatives, Fair Value [Line Items] | ||
Assets, fair value | 0 | 0 |
Liabilities, fair value | (4) | (7) |
Not designated as hedging instrument | Currency exchange contracts | ||
Derivatives, Fair Value [Line Items] | ||
Assets, fair value | 45 | 74 |
Liabilities, fair value | (46) | (75) |
Not designated as hedging instrument | Other derivatives | ||
Derivatives, Fair Value [Line Items] | ||
Assets, fair value | 2 | 0 |
Liabilities, fair value | $ 0 | $ 0 |
Financial Instruments - Cash Flow Hedges (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) Recognized in AOCI | $ (3) | $ 1 | ||
Gain (Loss) Recognized in AOCI | $ (6) | $ 1 | ||
Cash flow hedging | Currency exchange contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) Recognized in AOCI | (4) | 1 | ||
Gain (Loss) Recognized in AOCI | (7) | 1 | ||
Gain (Loss) Reclassified from AOCI to Earnings | $ 0 | $ 0 | ||
Gain (Loss) Reclassified from AOCI to Earnings | $ 0 | $ 0 |
Financial Instruments - Economic Hedges (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Embedded derivative, gain | $ 2 | $ 30 | ||
Embedded derivatives, loss | $ 0 | $ (10) | ||
Not designated as hedging instrument, economic hedge | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Total | (10) | (10) | (7) | 7 |
Not designated as hedging instrument, economic hedge | Currency exchange contracts | Cost of goods sold | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Gains (losses) from derivatives | (8) | (37) | (5) | 4 |
Not designated as hedging instrument, economic hedge | Currency exchange contracts | Selling, general and administrative expenses | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Gains (losses) from derivatives | (3) | 26 | (4) | 2 |
Not designated as hedging instrument, economic hedge | Commodity derivatives | Cost of goods sold | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Gains (losses) from derivatives | (2) | 1 | 0 | 1 |
Not designated as hedging instrument, economic hedge | Other derivatives | Other non operating income (loss), net | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Gains (losses) from derivatives | $ 3 | $ 0 | $ 2 | $ 0 |
Segment Information - Narrative (Details) |
6 Months Ended |
---|---|
Jun. 30, 2019
segment
| |
Segment Reporting [Abstract] | |
Number of operating segments | 4 |
Segment Information - Operating Profit (Loss) by Segment (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Summarized financial information [Abstract] | ||||
Revenue | $ 5,994 | $ 5,548 | $ 11,608 | $ 10,947 |
Income (loss) before income taxes and equity in loss of affiliate | 84 | 58 | 222 | (27) |
Restructuring, impairment and other | (50) | (146) | (112) | (308) |
Separation and merger related costs | (40) | (50) | (74) | (96) |
Other non operating income (loss), net | (131) | 43 | (110) | 45 |
Interest expense, net | (56) | (63) | (115) | (109) |
Operating segments | ||||
Summarized financial information [Abstract] | ||||
Income (loss) before income taxes and equity in loss of affiliate | 466 | 387 | 839 | 714 |
Corporate | ||||
Summarized financial information [Abstract] | ||||
Income (loss) before income taxes and equity in loss of affiliate | (105) | (98) | (205) | (196) |
Segment reconciling items | ||||
Summarized financial information [Abstract] | ||||
Inventory impairments | 0 | (15) | 0 | (76) |
Oilfield Services | ||||
Summarized financial information [Abstract] | ||||
Revenue | 3,263 | 2,884 | 6,249 | 5,562 |
Oilfield Services | Operating segments | ||||
Summarized financial information [Abstract] | ||||
Income (loss) before income taxes and equity in loss of affiliate | 233 | 189 | 409 | 330 |
Oilfield Equipment | ||||
Summarized financial information [Abstract] | ||||
Revenue | 693 | 617 | 1,428 | 1,281 |
Oilfield Equipment | Operating segments | ||||
Summarized financial information [Abstract] | ||||
Income (loss) before income taxes and equity in loss of affiliate | 14 | (12) | 26 | (18) |
Turbomachinery & Process Solutions | ||||
Summarized financial information [Abstract] | ||||
Revenue | 1,405 | 1,385 | 2,707 | 2,845 |
Turbomachinery & Process Solutions | Operating segments | ||||
Summarized financial information [Abstract] | ||||
Income (loss) before income taxes and equity in loss of affiliate | 135 | 113 | 253 | 232 |
Digital Solutions | ||||
Summarized financial information [Abstract] | ||||
Revenue | 632 | 662 | 1,224 | 1,260 |
Digital Solutions | Operating segments | ||||
Summarized financial information [Abstract] | ||||
Income (loss) before income taxes and equity in loss of affiliate | $ 84 | $ 96 | $ 152 | $ 169 |
Related Party Transactions (Details) $ in Millions |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jan. 01, 2019
USD ($)
|
Jul. 03, 2017
USD ($)
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2019
USD ($)
nomination
|
Jun. 30, 2018
USD ($)
|
May 01, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Related Party Transaction [Line Items] | ||||||||
Total current receivables, gross | $ 6,717.0 | $ 6,717.0 | $ 6,389.0 | |||||
Accounts payable, GE and its affiliates | ||||||||
Related Party Transaction [Line Items] | ||||||||
Accounts payable, related party | 498.0 | 498.0 | 538.0 | |||||
GE Capital accounts payable program | ||||||||
Related Party Transaction [Line Items] | ||||||||
Accounts payable, related party | 454.0 | 454.0 | 471.0 | |||||
Related parties | ||||||||
Related Party Transaction [Line Items] | ||||||||
Total current receivables, gross | $ 742.0 | 742.0 | 746.0 | |||||
JV aero-derivative gas turbine products and services | Joint venture, GE aero-derivative gas turbine products and services | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party transaction | $ 60.0 | |||||||
Joint venture ownership percentage | 50.00% | 50.00% | ||||||
Voting power threshold | 20.00% | |||||||
Board of directors nomination, upon triggering event | nomination | 1 | |||||||
GE | Corporate overhead allocation | ||||||||
Related Party Transaction [Line Items] | ||||||||
Selling, general and administrative expenses, agreement | $ 27.5 | $ 55.0 | ||||||
Selling, general and administrative expenses, agreement, service increase (decrease) | (50.00%) | |||||||
Related party transaction, term | 90 days | |||||||
GE | Intercompany Services Agreement | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party transaction, term | 90 days | |||||||
Related party transaction | $ 7.0 | $ 14.0 | $ 14.0 | $ 28.0 | ||||
GE | Sales of products and services, GE and its affiliates | ||||||||
Related Party Transaction [Line Items] | ||||||||
Revenue from related parties | 108.0 | 84.0 | 189.0 | 184.0 | ||||
GE | Purchases, GE and its affiliates | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party purchases | 428.0 | $ 523.0 | $ 879.0 | $ 926.0 | ||||
GE | Industrial Steam Turbine (IST) sale agreement with GE | BHGE LLC | ||||||||
Related Party Transaction [Line Items] | ||||||||
Due to Affiliate | $ 13.0 | |||||||
GE | Long-term supply arrangement, heavy-duty gas turbine units | BHGE LLC | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party transaction, term | 5 years | |||||||
GE | Long-term supply arrangement, associated services | BHGE LLC | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party transaction, term | 20 years | |||||||
GE | Operations and pricing levels, control upgrade services | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party transaction, term | 4 years | |||||||
GE | Related party amount, due to related party | ||||||||
Related Party Transaction [Line Items] | ||||||||
Assets held on behalf of GE | 856.0 | $ 856.0 | 896.0 | |||||
Cash | 739.0 | 739.0 | 747.0 | |||||
GE | Angola Bonds | Related party amount, due to related party | ||||||||
Related Party Transaction [Line Items] | ||||||||
Investment securities | 117.0 | 117.0 | 149.0 | |||||
GE | Related parties | ||||||||
Related Party Transaction [Line Items] | ||||||||
Total current receivables, gross | 668.0 | 668.0 | 653.0 | |||||
BHGE | Related parties | ||||||||
Related Party Transaction [Line Items] | ||||||||
Total current receivables, gross | $ 74.0 | $ 74.0 | $ 93.0 |
Commitments and Contingencies - Narrative (Details) € in Millions, $ in Millions |
6 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 18, 2019
USD ($)
|
Mar. 11, 2019
EUR (€)
|
Jul. 31, 2018
USD ($)
|
Aug. 03, 2016
EUR (€)
|
Jun. 30, 2019
EUR (€)
subsidiary
company
|
Jun. 30, 2019
USD ($)
|
|
Loss Contingencies [Line Items] | ||||||
Off-balance sheet arrangements | $ 3,800 | |||||
Equipment failure | Pending litigation | Natural Gas Storage System in Northern Germany | ||||||
Loss Contingencies [Line Items] | ||||||
Value of alleged damages sought | € | € 142 | € 202 | ||||
Marginal rate on annual prime rate (percent) | 5.00% | 5.00% | ||||
Breach of contract | Pending litigation | International Engineering & Construction S.A. (IEC) | ||||||
Loss Contingencies [Line Items] | ||||||
Value of alleged damages sought | $ 591 | |||||
Damage from fire | Pending litigation | INOES and Naphtachimie | ||||||
Loss Contingencies [Line Items] | ||||||
Value of alleged damages sought | € | € 250 | |||||
Plant shutdown days | 15 days | |||||
Subsidiaries participating | subsidiary | 2 | |||||
Other companies participating | company | 17 | |||||
Breach of fiduciary duties | Pending litigation | 2018 Transactions | ||||||
Loss Contingencies [Line Items] | ||||||
Repurchase of stock from GE | $ 1,500 | |||||
GE sale of stock | $ 2,500 |
Commitments and Contingencies - Schedule of Product Warranties (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance | $ 236 | $ 164 |
Provisions | 5 | 18 |
Expenditures | (10) | (15) |
Other | (7) | 119 |
Ending balance | $ 224 | $ 286 |
Restructuring, Impairment and Other - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Restructuring and Related Activities [Abstract] | ||||
Restructuring, impairment and other | $ 50 | $ 146 | $ 112 | $ 308 |
Restructuring charges | 45 | 68 | 107 | 193 |
Estimated remaining charges | 54 | 54 | ||
Restructuring, impairment and other charges | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Other asset impairment charges and foreign currency translation gain (loss), realized | $ 5 | $ 78 | $ 5 | $ 115 |
Restructuring, Impairment and Other - Schedule of Restructuring Charges (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring charges | $ 45 | $ 68 | $ 107 | $ 193 |
Property, plant & equipment, net | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring charges | 7 | 18 | 16 | 37 |
Employee-related termination expenses | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring charges | 34 | 16 | 78 | 99 |
Asset relocation costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring charges | 2 | 8 | 4 | 13 |
Environmental remediation costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring charges | 0 | 0 | 0 | 3 |
Contract termination fees | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring charges | 2 | 21 | 9 | 28 |
Other incremental costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring charges | 0 | 5 | 0 | 13 |
Operating segments | Oilfield Services | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring charges | 19 | 40 | 36 | 99 |
Operating segments | Oilfield Equipment | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring charges | 0 | 6 | 18 | 18 |
Operating segments | Turbomachinery & Process Solutions | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring charges | 10 | 11 | 29 | 39 |
Operating segments | Digital Solutions | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring charges | 9 | 7 | 12 | 16 |
Corporate | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring charges | $ 7 | $ 4 | $ 12 | $ 21 |
Assets and Liabilities of Business Held for Sale (Details) - Reciprocating Compression (Recip) - Disposal group, held-for-sale $ in Millions |
Jun. 30, 2019
USD ($)
|
---|---|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Sales price | $ 80 |
Assets | |
Current receivables | 29 |
Inventories | 94 |
Property, plant and equipment | 21 |
Goodwill | 14 |
Other intangible assets | 66 |
Valuation allowance on disposal group classified as held for sale (1) | (136) |
Other assets | 8 |
Total assets of business held for sale | 96 |
Liabilities | |
Accounts payable | (11) |
All other liabilities | (16) |
Total liabilities of business held for sale | (27) |
Total net assets of business held for sale | 69 |
Costs associated with sale | $ 11 |
Label | Element | Value |
---|---|---|
Accounting Standards Update 2016-16 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 67,000,000 |
Accounting Standards Update 2016-16 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 67,000,000 |
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