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 March 31, | ||||||||
(In millions, except per unit amounts) | 2020 | 2019 | ||||||
Revenue: | ||||||||
Sales of goods | $ | $ | ||||||
Sales of services | ||||||||
Total revenue | ||||||||
Costs and expenses: | ||||||||
Cost of goods sold | ||||||||
Cost of services sold | ||||||||
Selling, general and administrative | ||||||||
Goodwill impairment | ||||||||
Restructuring, impairment and other | ||||||||
Separation and merger related | ||||||||
Total costs and expenses | ||||||||
Operating income (loss) | ( | |||||||
Other non-operating income, net | ||||||||
Interest expense, net | ( | ( | ||||||
Income (loss) before income taxes | ( | |||||||
Provision for income taxes | ( | ( | ||||||
Net income (loss) | ( | |||||||
Less: Net income (loss) attributable to noncontrolling interests | ||||||||
Net income (loss) attributable to Baker Hughes Holdings LLC | $ | ( | $ | |||||
Cash distribution per common unit | $ | $ |
Three Months Ended March 31, | ||||||||
(In millions) | 2020 | 2019 | ||||||
Net income (loss) | $ | ( | $ | |||||
Less: Net income (loss) attributable to noncontrolling interests | ||||||||
Net income (loss) attributable to Baker Hughes Holdings LLC | ( | |||||||
Other comprehensive income (loss): | ||||||||
Investment securities | ( | |||||||
Foreign currency translation adjustments | ( | |||||||
Cash flow hedges | ( | |||||||
Benefit plans | ||||||||
Other comprehensive income (loss) | ( | |||||||
Less: Other comprehensive income (loss) attributable to noncontrolling interests | ||||||||
Other comprehensive income (loss) attributable to Baker Hughes Holdings LLC | ( | |||||||
Comprehensive income (loss) | ( | |||||||
Less: Comprehensive income (loss) attributable to noncontrolling interests | ||||||||
Comprehensive income (loss) attributable to Baker Hughes Holdings LLC | $ | ( | $ |
(In millions) | March 31, 2020 | December 31, 2019 | ||||||
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 $ | ||||||||
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 | ||||||||
Retained loss | ( | ( | ||||||
Accumulated other comprehensive loss | ( | ( | ||||||
Baker Hughes Holdings LLC equity | ||||||||
Noncontrolling interests | ||||||||
Total equity | ||||||||
Total liabilities and equity | $ | $ |
(In millions, except per unit amounts) | Members' Capital | Retained Loss | Accumulated Other Comprehensive Loss | Non-controlling Interests | Total Equity | ||||||||||||
Balance at December 31, 2019 | $ | $ | ( | $ | ( | $ | $ | ||||||||||
Comprehensive income (loss): | |||||||||||||||||
Net loss | ( | ( | |||||||||||||||
Other comprehensive loss | ( | ( | |||||||||||||||
Regular cash distribution to members ($ | ( | ( | |||||||||||||||
Baker Hughes Stock-based compensation cost | |||||||||||||||||
Other | ( | ||||||||||||||||
Balance at March 31, 2020 | $ | $ | ( | $ | ( | $ | $ |
(In millions, except per unit amounts) | Members' Capital | Retained Earnings (Loss) | Accumulated Other Comprehensive Loss | Non-controlling Interests | Total Equity | ||||||||||||
Balance at December 31, 2018 | $ | $ | ( | $ | ( | $ | $ | ||||||||||
Comprehensive income: | |||||||||||||||||
Net income | |||||||||||||||||
Other comprehensive income | |||||||||||||||||
Regular cash distribution to members ($ | ( | ( | |||||||||||||||
Baker Hughes Stock-based compensation cost | |||||||||||||||||
Other | ( | ( | ( | ||||||||||||||
Balance at March 31, 2019 | $ | $ | ( | $ | ( | $ | $ |
Three Months Ended March 31, | ||||||||
(In millions) | 2020 | 2019 | ||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | ( | $ | |||||
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | ||||||||
Depreciation and amortization | ||||||||
Goodwill impairment | ||||||||
Intangible assets impairment | ||||||||
Property, plant and equipment impairment | ||||||||
Inventory impairment | ||||||||
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 (used in) operating activities | ( | |||||||
Cash flows from investing activities: | ||||||||
Expenditures for capital assets | ( | ( | ||||||
Proceeds from disposal of assets | ||||||||
Other investing items, net | ( | |||||||
Net cash flows used in investing activities | ( | ( | ||||||
Cash flows from financing activities: | ||||||||
Net repayments of debt and other borrowings | ( | ( | ||||||
Distributions to members | ( | ( | ||||||
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, net of refunds | $ | $ | ||||||
Interest paid | $ | $ |
Three Months Ended March 31, | ||||||||
Total Revenue | 2020 | 2019 | ||||||
U.S. | $ | $ | ||||||
Non-U.S. | ||||||||
Total | $ | $ |
March 31, 2020 | December 31, 2019 | |||||||
Customer receivables | $ | $ | ||||||
Related parties | ||||||||
Other | ||||||||
Total current receivables | ||||||||
Less: Allowance for credit losses | ( | ( | ||||||
Total current receivables, net | $ | $ |
March 31, 2020 | December 31, 2019 | |||||||
Finished goods | $ | $ | ||||||
Work in process and raw materials | ||||||||
Total inventories, net | $ | $ |
Oilfield Services | Oilfield Equipment | Turbo-machinery & Process Solutions | Digital Solutions | Total | |||||||||||||
Balance at December 31, 2018, gross | $ | $ | $ | $ | $ | ||||||||||||
Accumulated impairment at December 31, 2018 | ( | ( | ( | ( | |||||||||||||
Balance at December 31, 2018 | |||||||||||||||||
Currency exchange and others | ( | ( | ( | ||||||||||||||
Balance at December 31, 2019 | |||||||||||||||||
Impairment | ( | ( | ( | ||||||||||||||
Currency exchange and others | ( | ( | ( | ( | ( | ||||||||||||
Balance at March 31, 2020 | $ | $ | $ | $ | $ |
March 31, 2020 | December 31, 2019 | |||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | |||||||||||||||
Customer relationships (1) | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||
Technology (1) | ( | ( | ||||||||||||||||||
Trade names and trademarks (1) | ( | ( | ||||||||||||||||||
Capitalized software (1) | ( | ( | ||||||||||||||||||
Other | ( | ( | ||||||||||||||||||
Finite-lived intangible assets | ( | ( | ||||||||||||||||||
Indefinite-lived intangible assets | — | — | ||||||||||||||||||
Total intangible assets | $ | $ | ( | $ | $ | $ | ( | $ |
Year | Estimated Amortization Expense | ||||
Remainder of 2020 | $ | ||||
2021 | |||||
2022 | |||||
2023 | |||||
2024 | |||||
2025 |
March 31, 2020 | December 31, 2019 | |||||||
Long-term product service agreements | $ | $ | ||||||
Long-term equipment contracts (1) | ||||||||
Contract assets (total revenue in excess of billings) | ||||||||
Deferred inventory costs | ||||||||
Non-recurring engineering costs | ||||||||
Contract and other deferred assets | $ | $ |
March 31, 2020 | December 31, 2019 | |||||||
Progress collections | $ | $ | ||||||
Deferred income | ||||||||
Progress collections and deferred income (contract liabilities) | $ | $ |
Three Months Ended March 31, | ||||||||
Operating Lease Expense | 2020 | 2019 | ||||||
Long-term fixed lease | $ | $ | ||||||
Long-term variable lease | ||||||||
Short-term lease (1) | ||||||||
Total operating lease expense | $ | $ |
March 31, 2020 | December 31, 2019 | |||||||
Short-term borrowings | ||||||||
Short-term borrowings from GE | $ | $ | ||||||
Other borrowings | ||||||||
Total short-term borrowings | ||||||||
Long-term borrowings | ||||||||
Other long-term borrowings | ||||||||
Total long-term borrowings | ||||||||
Total borrowings | $ | $ |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Service cost | $ | $ | ||||||
Interest cost | ||||||||
Expected return on plan assets | ( | ( | ||||||
Amortization of net actuarial loss | ||||||||
Net periodic cost | $ | $ |
Common Units Held by Baker Hughes | Common Units Held by GE | |||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||
Balance at January 1 | ||||||||||||||
Issue of Units to Baker Hughes under equity incentive plan | ||||||||||||||
Balance at March 31 |
Investment Securities | Foreign Currency Translation Adjustments | Cash Flow Hedges | Benefit Plans | Accumulated Other Comprehensive Loss | |||||||||||||
Balance at December 31, 2019 | $ | $ | ( | $ | $ | ( | $ | ( | |||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | ( | ( | |||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | |||||||||||||||||
Deferred taxes | ( | ( | |||||||||||||||
Other comprehensive income (loss) | ( | ( | ( | ( | |||||||||||||
Less: Other comprehensive income (loss) attributable to noncontrolling interests | |||||||||||||||||
Balance at March 31, 2020 | $ | $ | ( | $ | $ | ( | $ | ( |
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 | |||||||||||||||||
Less: Other comprehensive income attributable to noncontrolling interests | |||||||||||||||||
Balance at March 31, 2019 | $ | $ | ( | $ | $ | ( | $ | ( |
March 31, 2020 | December 31, 2019 | |||||||||||||||||||||||||
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 | $ | $ | ( | $ | $ | ( | $ | $ | ( | $ | $ | ( |
2020 | 2019 | |||||||
Balance at January 1 | $ | $ | ||||||
Purchases | ||||||||
Proceeds at maturity | ( | ( | ||||||
Unrealized gains (losses) recognized in accumulated other comprehensive income (loss) | ( | |||||||
Balance at March 31 | $ | $ |
March 31, 2020 | December 31, 2019 | |||||||||||||||||||||||||
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 | $ | $ | $ | $ | $ | $ | $ | $ |
March 31, 2020 | December 31, 2019 | |||||||||||||
Assets | (Liabilities) | Assets | (Liabilities) | |||||||||||
Derivatives accounted for as hedges | ||||||||||||||
Currency exchange contracts | $ | $ | ( | $ | $ | |||||||||
Derivatives not accounted for as hedges | ||||||||||||||
Currency exchange contracts and other | ( | ( | ||||||||||||
Total derivatives | $ | $ | ( | $ | $ | ( |
Three Months Ended March 31, | ||||||||||||||
Gain (Loss) Recognized in AOCI | Gain (Loss) Reclassified from AOCI to Earnings | |||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||
Currency exchange contracts | $ | ( | $ | $ | $ |
Derivatives not designated as hedging instruments | Condensed consolidated statement of income caption | Three Months Ended March 31, | |||||||||
2020 | 2019 | ||||||||||
Currency exchange contracts (1) | Cost of goods sold | $ | ( | $ | |||||||
Currency exchange contracts | Selling, general and administrative | ( | |||||||||
Commodity derivatives | Cost of goods sold | ( | |||||||||
Other derivatives | Other non-operating income, net | ( | |||||||||
Total (2) | $ | $ |
Three Months Ended March 31, | ||||||||
Segment revenue | 2020 | 2019 | ||||||
Oilfield Services | $ | $ | ||||||
Oilfield Equipment | ||||||||
Turbomachinery & Process Solutions | ||||||||
Digital Solutions | ||||||||
Total | $ | $ |
Three Months Ended March 31, | ||||||||
Segment income (loss) before income taxes | 2020 | 2019 | ||||||
Oilfield Services | $ | $ | ||||||
Oilfield Equipment | ( | |||||||
Turbomachinery & Process Solutions | ||||||||
Digital Solutions | ||||||||
Total segment | ||||||||
Corporate | ( | ( | ||||||
Inventory impairment (1) | ( | |||||||
Goodwill impairment | ( | |||||||
Restructuring, impairment and other | ( | ( | ||||||
Separation and merger related | ( | ( | ||||||
Other non-operating income, net | ||||||||
Interest expense, net | ( | ( | ||||||
Total | $ | ( | $ |
Segment assets | March 31, 2020 | December 31, 2019 | ||||||
Oilfield Services | $ | $ | ||||||
Oilfield Equipment | ||||||||
Turbomachinery & Process Solutions | ||||||||
Digital Solutions | ||||||||
Total segment | ||||||||
Corporate and eliminations (1) | ||||||||
Total | $ | $ |
2020 | 2019 | |||||||
Balance at January 1 | $ | $ | ||||||
Provisions | ||||||||
Expenditures | ( | ( | ||||||
Other | ( | |||||||
Balance at March 31 | $ | $ |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Oilfield Services | $ | $ | ||||||
Oilfield Equipment | ||||||||
Turbomachinery & Process Solutions | ||||||||
Digital Solutions | ||||||||
Corporate | ||||||||
Total | $ | $ |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Impairments of property, plant & equipment | $ | $ | ||||||
Employee-related termination expenses | ||||||||
Contract termination fees | ||||||||
Other incremental costs | ||||||||
Total | $ | $ |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Brent oil price ($/Bbl) (1) | $ | 50.27 | $ | 63.10 | ||||
WTI oil price ($/Bbl) (2) | 45.34 | 54.82 | ||||||
Natural gas price ($/mmBtu) (3) | 1.90 | 2.92 |
Three Months Ended March 31, | |||||||||||
2020 | 2019 | % Change | |||||||||
North America | 981 | 1,226 | (20) | % | |||||||
International | 1,074 | 1,028 | 4 | % | |||||||
Worldwide | 2,055 | 2,254 | (9) | % |
Three Months Ended March 31, | $ Change | ||||||||||
2020 | 2019 | ||||||||||
Revenue: | |||||||||||
Oilfield Services | $ | 3,139 | $ | 2,986 | $ | 153 | |||||
Oilfield Equipment | 712 | 735 | (23) | ||||||||
Turbomachinery & Process Solutions | 1,085 | 1,302 | (217) | ||||||||
Digital Solutions | 489 | 592 | (103) | ||||||||
Total | $ | 5,425 | $ | 5,615 | $ | (190) |
Three Months Ended March 31, | $ Change | ||||||||||
2020 | 2019 | ||||||||||
Segment operating income (loss): | |||||||||||
Oilfield Services | $ | 206 | $ | 176 | $ | 30 | |||||
Oilfield Equipment | (8) | 12 | (20) | ||||||||
Turbomachinery & Process Solutions | 134 | 118 | 16 | ||||||||
Digital Solutions | 29 | 68 | (39) | ||||||||
Total segment operating income | 361 | 373 | (12) | ||||||||
Corporate | (122) | (100) | (22) | ||||||||
Inventory impairment | (160) | — | (160) | ||||||||
Goodwill impairment | (14,717) | — | (14,717) | ||||||||
Restructuring, impairment and other | (1,325) | (62) | (1,263) | ||||||||
Separation and merger related | (41) | (34) | (7) | ||||||||
Operating income (loss) | (16,003) | 176 | (16,181) | ||||||||
Other non-operating income, net | 25 | 21 | 4 | ||||||||
Interest expense, net | (59) | (59) | — | ||||||||
Income (loss) before income taxes | (16,037) | 138 | (16,175) | ||||||||
Provision for income taxes | (8) | (67) | 59 | ||||||||
Net income (loss) | $ | (16,045) | $ | 71 | $ | (16,116) |
(In millions) | 2020 | 2019 | ||||||
Operating activities | $ | 478 | $ | (143) | ||||
Investing activities | (318) | (256) | ||||||
Financing activities | (327) | (233) |
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.DEF* | XBRL Definition Linkbase Document | |||||||
101.LAB* | XBRL Label Linkbase Document | |||||||
101.PRE* | XBRL Presentation Linkbase Document |
Baker Hughes Holdings LLC (Registrant) | |||||||||||
Date: | April 24, 2020 | By: | /s/ BRIAN WORRELL | ||||||||
Brian Worrell | |||||||||||
Chief Financial Officer | |||||||||||
Date: | April 24, 2020 | By: | /s/ KURT CAMILLERI | ||||||||
Kurt Camilleri | |||||||||||
Senior Vice President, Controller and Chief Accounting Officer |
Date: | April 24, 2020 | By: | /s/ Lorenzo Simonelli | |||||||||||
Lorenzo Simonelli | ||||||||||||||
President and Chief Executive Officer | ||||||||||||||
Date: | April 24, 2020 | By: | /s/ Brian Worrell | |||||||||||
Brian Worrell | ||||||||||||||
Chief Financial Officer | ||||||||||||||
/s/ Lorenzo Simonelli | ||||||||||||||
Name: | Lorenzo Simonelli | |||||||||||||
Title: | President and Chief Executive Officer | |||||||||||||
Date: | April 24, 2020 | |||||||||||||
/s/ Brian Worrell | ||||||||||||||
Name: | Brian Worrell | |||||||||||||
Title: | Chief Financial Officer | |||||||||||||
Date: | April 24, 2020 |
Borrowings (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term and long-term borrowings | Short-term and long-term borrowings are comprised of the following:
|
Segment Information (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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 before the following: net interest expense, net other non-operating income, corporate expenses, restructuring, impairment and other charges, inventory impairments, separation and merger related costs, goodwill impairments and certain gains and losses not allocated to the operating segments.
(1)Charges for inventory impairments are predominantly reported in the "Cost of goods sold" caption of the condensed consolidated statements of income (loss). The following table presents total assets by segment:
(1) Corporate and eliminations in total segment assets includes adjustments of intercompany investments and receivables that are reflected within the total assets of the four reportable segments.
|
Contract and Other Deferred Assets |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
(1)Reflects revenue earned in excess of billings on our long-term contracts to construct technically complex equipment and certain other service agreements. Revenue recognized during the three months ended March 31, 2020 and 2019 from performance obligations satisfied (or partially satisfied) in previous periods related to our long-term service agreements was $6 million and $7 million, 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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Revenue Related to Contracts with Customers |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 March 31, 2020 and 2019, the aggregate amount of the transaction price allocated to the unsatisfied (or partially unsatisfied) performance obligations was $22.7 billion and $20.5 billion, respectively. As of March 31, 2020, we expect to recognize revenue of approximately 53%, 67% and 91% 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 March 31, 2020 and 2019 that was included in the contract liabilities at the beginning of the period was $410 million and $553 million, respectively.
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Employee Benefit Plans |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | EMPLOYEE BENEFIT PLANS We have both funded and unfunded defined benefit plans which include four U.S. plans and seven non-U.S. plans, primarily in the UK, Germany, and Canada, all with plan assets or obligations greater than $20 million. We use a December 31 measurement date for these plans, and generally provide benefits to employees based on formulas recognizing length of service and earnings. The components of net periodic cost of plans sponsored by us are as follows:
The service cost component of the net periodic cost is included in operating income (loss) and all other components are included in non-operating income (loss) in our condensed consolidated statements of income (loss).
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Restructuring, Impairment and Other - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Restructuring and Related Activities [Abstract] | ||
Approved a restructuring plan | $ 1,800 | |
Inventory impairment | 160 | $ 0 |
Restructuring Cost and Reserve [Line Items] | ||
Other charges | 890 | |
Intangible assets impairment | 725 | 0 |
Property, plant and equipment impairment | 218 | $ 0 |
Litigation and impairment of equity method investment | 73 | |
Oilfield Services | ||
Restructuring Cost and Reserve [Line Items] | ||
Intangible assets impairment | 601 | |
Oilfield Equipment | ||
Restructuring Cost and Reserve [Line Items] | ||
Intangible assets impairment | 124 | |
Other long-lived asset impairments | 216 | |
Property, plant and equipment impairment | 77 | |
Other assets | $ 15 |
Employee Benefit Plans - Net Period Cost (Details) - Pension Benefits - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Components of net periodic benefit cost [Abstract] | ||
Service cost | $ 7 | $ 4 |
Interest cost | 20 | 19 |
Expected return on plan assets | (31) | (25) |
Amortization of net actuarial loss | 8 | 4 |
Net periodic cost | $ 4 | $ 2 |
Leases - Narrative (Details) |
Mar. 31, 2020 |
Mar. 31, 2019 |
---|---|---|
Leases [Abstract] | ||
Operating lease, weighted-average remaining lease term | 8 years | 9 years |
Operating lease, weighted-average discount rate | 3.80% | 4.40% |
Financial Instruments - Reconciliation of Recurring Level 3 Fair Value Measurements (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 259 | $ 288 |
Purchases | 0 | 6 |
Proceeds at maturity | (69) | (6) |
Unrealized gains (losses) recognized in accumulated other comprehensive income (loss) | (2) | 2 |
Ending balance | $ 187 | $ 290 |
Equity - Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning Balance | $ 34,414 | $ 34,876 |
Other comprehensive income (loss) before reclassifications | (271) | 171 |
Amounts reclassified from accumulated other comprehensive income (loss) | 11 | 1 |
Deferred taxes | (4) | 0 |
Other comprehensive income (loss) | (264) | 172 |
Less: Other comprehensive income (loss) attributable to noncontrolling interests | 0 | 0 |
Ending Balance | 17,985 | 34,966 |
Investment Securities, Parent | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning Balance | 2 | 0 |
Ending Balance | 0 | 2 |
Investment Securities | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Other comprehensive income (loss) before reclassifications | (2) | 2 |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 |
Deferred taxes | 0 | 0 |
Other comprehensive income (loss) | (2) | 2 |
Investment Securities, Noncontrolling Interest | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Less: Other comprehensive income (loss) attributable to noncontrolling interests | 0 | 0 |
Foreign Currency Translation Adjustment, Parent | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning Balance | (2,274) | (2,326) |
Ending Balance | (2,551) | (2,160) |
Foreign Currency Translation Adjustments | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Other comprehensive income (loss) before reclassifications | (277) | 166 |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 |
Deferred taxes | 0 | |
Other comprehensive income (loss) | (277) | 166 |
Foreign Currency Translation Adjustments, Noncontrolling Interest | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Less: Other comprehensive income (loss) attributable to noncontrolling interests | 0 | 0 |
Cash Flow Hedges, Parent | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning Balance | 10 | (3) |
Ending Balance | 2 | |
Cash Flow Hedges | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Other comprehensive income (loss) before reclassifications | (9) | 5 |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 |
Deferred taxes | 1 | (1) |
Other comprehensive income (loss) | (8) | 4 |
Ending Balance | 1 | |
Cash Flow Hedges, Noncontrolling Interest | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Less: Other comprehensive income (loss) attributable to noncontrolling interests | 0 | 0 |
Benefit Plans, Parent | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning Balance | (327) | (133) |
Ending Balance | (304) | (133) |
Benefit Plans | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Other comprehensive income (loss) before reclassifications | 17 | (2) |
Amounts reclassified from accumulated other comprehensive income (loss) | 11 | 1 |
Deferred taxes | (5) | 1 |
Other comprehensive income (loss) | 23 | 0 |
Benefit Plans, Noncontrolling Interest | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Less: Other comprehensive income (loss) attributable to noncontrolling interests | 0 | 0 |
Accumulated Other Comprehensive Loss | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning Balance | (2,589) | (2,462) |
Other comprehensive income (loss) | (264) | 172 |
Ending Balance | $ (2,853) | $ (2,290) |
Financial Instruments - Cash Flow Hedges (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (Loss) Recognized in AOCI | $ (8) | $ 4 |
Cash flow hedging | Currency exchange contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (Loss) Recognized in AOCI | (9) | 5 |
Gain (Loss) Reclassified from AOCI to Earnings | $ 0 | $ 0 |
Basis of Presentation and Summary of Significant Accounting Policies |
3 Months Ended |
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Mar. 31, 2020 | |
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 Holdings LLC, a Delaware limited liability company (the Company, BHH LLC, we, us, or our), and the successor to Baker Hughes Incorporated, a Delaware corporation (BHI) is an energy technology company with a diversified portfolio of technologies and services that span the entire energy value chain. The partnership was formed as the result of a combination between BHI and the oil and gas business (GE O&G) of General Electric Company (GE). On April 15, 2020, the Company changed its name from Baker Hughes, a GE company, LLC to Baker Hughes Holdings LLC. As of March 31, 2020, GE owns approximately 36.6% of our common units and Baker Hughes Company (Baker Hughes) owns approximately 63.4% of our common units. BASIS OF PRESENTATION 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, 2019 (2019 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 the three months ended March 31, 2020, separation and merger related costs include costs incurred in connection with the separation from GE. In the three months ended March 31, 2019, separation and merger related costs are comprised solely of costs associated with the combination of BHI and GE O&G (the Transactions). See "Note 15. Related Party Transactions" for further information. 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 2019 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 March 31, 2020 and December 31, 2019, we had $1,004 million and $1,102 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 $93 million and $142 million, as of March 31, 2020 and December 31, 2019, respectively, held on behalf of GE. Cash and cash equivalents includes a total of $106 million and $162 million of cash at March 31, 2020 and December 31, 2019, 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 On January 1, 2020, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (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 previously used under U.S. GAAP, which generally require that a loss be incurred before it is recognized. The new standard also applies to financial assets arising from revenue transactions such as contract assets and accounts receivables. The adoption did not have a material impact on our condensed consolidated financial statements. On January 1, 2020, we adopted FASB ASU 2017-04, Intangibles - Goodwill and Other - Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by eliminating the requirement to calculate the fair value of the individual assets and liabilities of a reporting unit to measure goodwill impairment. Under the new ASU, when required to test goodwill for recoverability, an entity will perform its goodwill impairment test by comparing the fair value of the reporting unit with its carrying value and should recognize an impairment charge for the amount by which the carrying value exceeds the fair value of the reporting unit. We have applied this ASU on a prospective basis. See "Note 5. Goodwill and Other Intangible Assets" for further details. NEW ACCOUNTING STANDARDS TO BE ADOPTED 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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Current Receivables (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total current receivables | $ 6,558 | $ 6,814 |
Less: Allowance for credit losses | (333) | (323) |
Total current receivables, net | 6,225 | 6,491 |
Customer receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total current receivables | 5,181 | 5,448 |
Other | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total current receivables | 839 | 796 |
GE | Related parties | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total current receivables | $ 538 | $ 570 |
Goodwill and Other Intangible Assets - Schedule of Intangible Assets by Type (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Dec. 31, 2019 |
|
Finite-Lived Intangible Assets, Net [Abstract] | |||
Finite-lived intangible assets, gross | $ 4,909 | $ 5,994 | |
Finite-lived intangible assets, accumulated amortization | (2,574) | (2,855) | |
Finite-lived intangible assets, net | 2,335 | 3,139 | |
Indefinite-lived intangible assets | 2,241 | 2,242 | |
Intangible assets, gross | 7,150 | 8,236 | |
Other intangible assets, net | 4,576 | 5,381 | |
Intangible assets impairment | 725 | $ 0 | |
Customer relationships | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Finite-lived intangible assets, gross | 2,317 | 3,027 | |
Finite-lived intangible assets, accumulated amortization | (853) | (1,045) | |
Finite-lived intangible assets, net | 1,464 | 1,982 | |
Intangible assets impairment | 476 | ||
Technology | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Finite-lived intangible assets, gross | 1,030 | 1,075 | |
Finite-lived intangible assets, accumulated amortization | (605) | (626) | |
Finite-lived intangible assets, net | 425 | 449 | |
Intangible assets impairment | 8 | ||
Trade names and trademarks | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Finite-lived intangible assets, gross | 380 | 696 | |
Finite-lived intangible assets, accumulated amortization | (184) | (254) | |
Finite-lived intangible assets, net | 196 | 442 | |
Intangible assets impairment | 236 | ||
Capitalized software | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Finite-lived intangible assets, gross | 1,181 | 1,193 | |
Finite-lived intangible assets, accumulated amortization | (931) | (928) | |
Finite-lived intangible assets, net | 250 | 265 | |
Intangible assets impairment | 3 | ||
Other | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Finite-lived intangible assets, gross | 1 | 3 | |
Finite-lived intangible assets, accumulated amortization | (1) | (2) | |
Finite-lived intangible assets, net | $ 0 | $ 1 |
Condensed Consolidated Statements of Financial Position (Unaudited) (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
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---|---|---|---|---|---|
Property, plant and equipment, accumulated depreciation | $ 4,506 | $ 4,384 | |||
Investment securities held on behalf of GE | 189 | 283 | |||
Related party amount, due to related party | GE | |||||
Assets held on behalf of GE | 156 | 273 | |||
Cash and cash equivalents held on behalf of GE | 106 | 162 | |||
Investment securities held on behalf of GE | $ 50 | $ 111 | [1] | ||
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Cover Page - shares |
3 Months Ended | |
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Mar. 31, 2020 |
Apr. 17, 2020 |
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Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-09397 | |
Registrant Name | Baker Hughes Holdings LLC | |
Entity Incorporation, State Code | DE | |
Entity Tax Identification Number | 76-0207995 | |
Entity Address, Address Line One | 17021 Aldine Westfield | |
Entity Address, City or Town | Houston, | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77073-5101 | |
City Area Code | 713 | |
Local Phone Number | 439-8600 | |
Title of 12(b) Security | Share 5.125% Senior Notes due 2040 | |
Trading Symbol | None | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 0 | |
Entity Central Index Key | 0000808362 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
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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Segment Information |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | SEGMENT INFORMATION Our reportable segments, which are the same as our operating segments, are organized based on the nature of markets and customers. We report our operating results through our four operating segments that consist of similar products and services within each segment as described below. OILFIELD SERVICES (OFS) Oilfield Services 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) Oilfield Equipment 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. Oilfield Equipment 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) Turbomachinery & Process Solutions 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 Turbomachinery & Process Solutions 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) Digital Solutions provides equipment, software, and services for a wide range of industries, including oil & gas, power generation, aerospace, metals, and transportation. The offerings include sensor-based process measurement, non-destructive testing and inspection, turbine, generator and plant controls and condition monitoring, as well as pipeline integrity solutions. SEGMENT RESULTS Segment revenue and profit are determined based on the internal performance measures used by the Company to assess the performance of each segment in a financial period. 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 before the following: net interest expense, net other non-operating income, corporate expenses, restructuring, impairment and other charges, inventory impairments, separation and merger related costs, goodwill impairments and certain gains and losses not allocated to the operating segments.
(1)Charges for inventory impairments are predominantly reported in the "Cost of goods sold" caption of the condensed consolidated statements of income (loss). The following table presents total assets by segment:
(1) Corporate and eliminations in total segment assets includes adjustments of intercompany investments and receivables that are reflected within the total assets of the four reportable segments.
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Financial Instruments - Economic Hedges (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Embedded derivatives, gain | $ 7 | |
Embedded derivatives, loss | $ 2 | |
Not designated as hedging instrument, economic hedge | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Total | 63 | 3 |
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) | 3 |
Not designated as hedging instrument, economic hedge | Currency exchange contracts | Selling, general and administrative | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Gains (losses) from derivatives | 65 | (1) |
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) | 2 |
Not designated as hedging instrument, economic hedge | Other derivatives | Other non-operating income, net | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Gains (losses) from derivatives | $ 8 | $ (1) |
Financial Instruments - Narrative (Details) - USD ($) |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2020 |
Dec. 31, 2019 |
||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Investment securities | $ 189,000,000 | $ 283,000,000 | |||
Derivative, transfer to earnings | 2,000,000 | ||||
Derivative, notional amount | 5,500,000,000 | 5,700,000,000 | |||
Derivative, notional amount, net | 1,200,000,000 | 1,800,000,000 | |||
Equity securities without readily determinable fair values | 637,000,000 | ||||
Equity method on our investment in BJ Services | $ 0 | ||||
Cash flow hedging | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Derivative, term | 1 year | ||||
All other current assets | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Derivative assets | $ 60,000,000 | 52,000,000 | |||
All other assets | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Derivative assets | 1,000,000 | 6,000,000 | |||
All other current liabilities | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Derivative liability | 34,000,000 | 24,000,000 | |||
All other liabilities | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Derivative liability | 2,000,000 | 3,000,000 | |||
Related party amount, due to related party | GE | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Investment securities | 50,000,000 | $ 111,000,000 | [1] | ||
Level 3 | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Unrealized gain (loss) on Level 3 instruments held at reporting date | $ 0 | ||||
|
Equity - Non-controlling Interest (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Noncontrolling Interest [Line Items] | ||
Stockholders' Equity Attributable to Noncontrolling Interest | $ 123 | $ 115 |
Condensed Consolidated Statements of Financial Position (Unaudited) - USD ($) shares in Thousands, $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
||
---|---|---|---|---|
Current assets: | ||||
Cash and cash equivalents | [1] | $ 3,005 | $ 3,245 | |
Current receivables, net | 6,225 | 6,491 | ||
Inventories, net | 4,534 | 4,608 | ||
All other current assets | 961 | 949 | ||
Total current assets | 14,725 | 15,293 | ||
Property, plant and equipment (net of accumulated depreciation of $4,506 and $4,384) | 5,997 | 6,240 | ||
Goodwill | 5,639 | 20,396 | ||
Other intangible assets, net | 4,576 | 5,381 | ||
Contract and other deferred assets | 1,826 | 1,881 | ||
All other assets | 3,063 | 3,058 | ||
Deferred income taxes | 1,315 | 964 | ||
Total assets | [1] | 37,141 | 53,213 | |
Current liabilities: | ||||
Accounts payable | 3,983 | 4,268 | ||
Short-term debt and current portion of long-term debt | [1] | 210 | 321 | |
Progress collections and deferred income | 3,196 | 2,870 | ||
All other current liabilities | 2,719 | 2,535 | ||
Total current liabilities | 10,108 | 9,994 | ||
Long-term debt | 6,285 | 6,301 | ||
Deferred income taxes | 260 | 0 | ||
Liabilities for pensions and other postretirement benefits | 1,025 | 1,079 | ||
All other liabilities | 1,478 | 1,425 | ||
Members' Equity: | ||||
Retained loss | (16,167) | (110) | ||
Accumulated other comprehensive loss | (2,853) | (2,589) | ||
Baker Hughes Holdings LLC equity | 17,862 | 34,299 | ||
Noncontrolling interests | 123 | 115 | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Total | 17,985 | 34,414 | ||
Total liabilities and equity | $ 37,141 | $ 53,213 | ||
Common Unit, Outstanding | 1,031,000 | 1,027,000 | ||
Common Class B | ||||
Members' Equity: | ||||
Common stock | $ 36,882 | $ 36,998 | ||
|
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
||||
Cash flows from operating activities: | |||||
Net income (loss) | $ (16,045) | $ 71 | |||
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | |||||
Depreciation and amortization | 355 | 350 | |||
Goodwill impairment | 14,717 | 0 | |||
Intangible assets impairment | 725 | 0 | |||
Property, plant and equipment impairment | 218 | 0 | |||
Inventory impairment | 160 | 0 | |||
Changes in operating assets and liabilities: | |||||
Current receivables | 194 | (192) | |||
Inventories | (140) | (220) | |||
Accounts payable | (212) | (63) | |||
Progress collections and deferred income | 311 | 62 | |||
Contract and other deferred assets | 15 | 61 | |||
Other operating items, net | 180 | (212) | |||
Net cash flows from (used in) operating activities | 478 | (143) | |||
Cash flows from investing activities: | |||||
Expenditures for capital assets | (365) | (294) | |||
Proceeds from disposal of assets | 40 | 59 | |||
Other investing items, net | 7 | (21) | |||
Net cash flows used in investing activities | (318) | (256) | |||
Cash flows from financing activities: | |||||
Net repayments of debt and other borrowings | (115) | (48) | |||
Distributions to members | (186) | (187) | |||
Other financing items, net | (26) | 2 | |||
Net cash flows used in financing activities | (327) | (233) | |||
Effect of currency exchange rate changes on cash and cash equivalents | (73) | 22 | |||
Decrease in cash and cash equivalents | (240) | (610) | |||
Cash and cash equivalents, beginning of period | 3,245 | [1] | 3,677 | ||
Cash and cash equivalents, end of period | 3,005 | [1] | 3,067 | ||
Supplemental cash flows disclosures: | |||||
Income taxes paid, net of refunds | 118 | 76 | |||
Interest paid | $ 49 | $ 56 | |||
|
Revenue Related to Contracts with Customers - Narrative (Details) - USD ($) $ in Billions |
Mar. 31, 2020 |
Mar. 31, 2019 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Performance obligations expected to be satisfied | $ 22.7 | $ 20.5 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | Period one | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Performance obligations expected to be satisfied, percent | 53.00% | |
Performance obligations expected to be satisfied, expected timing | 2 years | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | Period two | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Performance obligations expected to be satisfied, percent | 67.00% | |
Performance obligations expected to be satisfied, expected timing | 5 years | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | Period three | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Performance obligations expected to be satisfied, percent | 91.00% | |
Performance obligations expected to be satisfied, expected timing | 15 years |
Goodwill and Other Intangible Assets - Narrative (Details) $ / shares in Units, $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2020
USD ($)
segment
|
Mar. 31, 2019
USD ($)
|
Mar. 23, 2020
$ / shares
|
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Number of reportable segments | segment | 4 | ||
Number of reportable units | segment | 4 | ||
Share price (in dollars per share) | $ / shares | $ 9.33 | ||
Finite-Lived Intangible Assets [Line Items] | |||
Impairment | $ 14,717 | $ 0 | |
Amortization expense for intangible assets included in net income | 84 | $ 96 | |
Oilfield Services | |||
Finite-Lived Intangible Assets [Line Items] | |||
Impairment | 11,428 | ||
Oilfield Equipment | |||
Finite-Lived Intangible Assets [Line Items] | |||
Impairment | $ 3,289 | ||
Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated useful lives | 1 year | ||
Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated useful lives | 30 years |
Current Receivables (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current receivables | Current receivables are comprised of the following:
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Commitments and Contingencies |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 arbitration 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 contesting the claims made by TRIUVA in the Houston Federal Court and the claims made by the customer in the second arbitration proceeding. At this time, we are not able to predict the outcome of the claims asserted in the Houston Federal Court or the second 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 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. 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 May 2, 2019, the USPTO issued a final written decision in an IPR on U.S. 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. On November 13, 2019, the U.S. Court of Appeals for the Federal Circuit affirmed the USPTO’s unpatentability findings with respect to U.S. Patent No. 7,134,505, and 7,543,634. On November 26, 2019, the USPTO issued a final written decision in the inter-partes review of U.S. Patent No. 7,861,774 finding all challenged claims unpatentable, and Rapid Completions did not timely appeal that decision. On January 21, 2020, the Federal Circuit affirmed the USPTO’s unpatentability finding as to all asserted claims of the U.S. Patent No. 9,303,501. 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. 2 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, our insurer has accepted coverage and is defending the Company in the expertise proceeding. 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 Baker Hughes 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); this action was dismissed by the Court on August 13, 2019. In the arbitration, 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 was held from December 9, 2019 to December 20, 2019. On March 3, 2020, IEC amended their damages claim to $700 million of alleged loss cash flow or, in the alternative, $244.9 million of lost profits and various costs based on alleged non-performance of the contracts in dispute, and in addition $4.8 million of liquidated damages, $58.6 million in take-or-pay costs of feed gas, and unspecified additional costs of rectification and take-or-pay future obligations, plus unspecified interest and attorneys fees. The Company and its subsidiaries have 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 Baker Hughes’s behalf against GE, the then-current members of the Board of Directors of Baker Hughes and Baker Hughes as a nominal defendant, related to the decision to (i) terminate the contractual prohibition barring GE from selling any of Baker Hughes’ shares before July 3, 2019; (ii) repurchase $1.5 billion in Baker Hughes stock from GE; (iii) permit GE to sell approximately $2.5 billion in Baker Hughes stock through a secondary offering; and (iv) enter into a series of other agreements and amendments that will govern the ongoing relationship between Baker Hughes and GE (collectively, the “2018 Transactions”). The complaints in both lawsuits allege, among other things, that GE, as Baker Hughes' controlling stockholder, and the members of Baker Hughes’ 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 Baker Hughes, 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 Baker Hughes' Conflicts Committee, and on May 15, 2019, Plaintiffs voluntarily dismissed their claims against former Baker Hughes director Martin Craighead. On June 7, 2019, the defendants and nominal defendant filed a motion to dismiss the lawsuit on the ground that the derivative plaintiffs failed to make a demand on Baker Hughes' Board of Directors to pursue the claims itself, and GE and Baker Hughes' Board of Directors filed a motion to dismiss the lawsuit on the ground that the complaint failed to state a claim on which relief can be granted. The Chancery Court denied the motions on October 8, 2019, except granted GE’s motion to dismiss the unjust enrichment claim against it. On October 31, 2019, Baker Hughes' Board of Directors designated a Special Litigation Committee and empowered it with full authority to investigate and evaluate the allegations and issues raised in the derivative litigation. The Special Litigation Committee filed a motion to stay the derivative litigation during its investigation. On December 3, 2019, the Chancery Court granted the motion and stayed the derivative litigation until June 1, 2020. The Special Litigation Committee’s investigation and evaluation remains ongoing. At this time, we are not able to predict the outcome of the Special Litigation Committee investigation or these claims. In March 2019, Baker Hughes 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. In December 2019, Baker Hughes received a similar document request from the Securities Exchange Commission (the "SEC"). Baker Hughes is cooperating with the DOJ and the SEC in connection with their requests and any related matters. In addition, Baker Hughes has agreed to toll any statute of limitations in connection with the matters subject to the DOJ’s document request. 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. On or around September 11, 2019, the grand jury issued an indictment on 25 counts, including 10 counts of Assault in the First Degree, 10 counts of Assault in the Second Degree, and 5 counts of Assault in the Third Degree. On or around December 3, 2019, the State agreed to dismiss the indictment against Baker Hughes Oilfield Operations, Inc. On April 9, 2020 the court granted the Company’s unopposed motion to dismiss the indictment for failure to present exculpatory evidence to the grand jury, thereby dismissing the indictments against Baker Hughes Incorporated, Baker Petrolite Corporation, and the Baker Hughes employee without prejudice. On August 13, 2019, Tri-State Joint Fund filed in the Delaware Court of Chancery, a shareholder class action lawsuit for and on the behalf of itself and all similarly situated public stockholders of Baker Hughes Incorporated (“BHI”) against the General Electric Company, the former members of the Board of Directors of BHI, and certain former BHI Officers alleging breaches of fiduciary duty, aiding and abetting, and other claims in connection with the Transactions. On October 28, 2019, City of Providence filed in the Delaware Court of Chancery a shareholder class action lawsuit for and on behalf of itself and all similarly situated public shareholders of BHI against GE, the former members of the Board of Directors of BHI, and certain former BHI Officers alleging substantially the same claims in connection with the Transactions. The relief sought in these complaints include a request for a declaration that Defendants breached their fiduciary duties, an award of damages, pre- and post-judgment interest, and attorneys’ fees and costs. The lawsuits have been consolidated, and plaintiffs filed a consolidated class action complaint on December 17, 2019 against certain former BHI officers alleging breaches of fiduciary duty and against GE for aiding and abetting those breaches. The December 2019 complaint omitted the former members of the Board of Directors of BHI, except for Mr. Craighead who also served as President and CEO of BHI. Mr. Craighead and Ms. Ross, who served as Senior Vice President and Chief Financial Officer of BHI, remain named in the December 2019 complaint along with GE. The relief sought in the consolidated complaint includes a declaration that the former BHI officers breached their fiduciary duties and that GE aided and abetted those breaches, an award of damages, pre- and post-judgment interest, and attorneys’ fees and costs. At this time, we are not able to predict the outcome of these claims. On December 11, 2019, BMC Software, Inc. (“BMC”) filed a lawsuit in federal court in the Southern District of Texas against Baker Hughes, a GE company, LLC alleging trademark infringement, unfair competition, and unjust enrichment, arising out of the Company’s use of its new logo and affiliated branding. On January 1, 2020, BMC amended its complaint to add Baker Hughes Company. The relief sought in the complaint includes a request for injunctive relief, an award of damages (including punitive damages), pre- and post-judgment interest, and attorneys’ fees and costs. At this time, we are not able to predict the outcome of these claims. 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. We also provide guarantees to GE Capital on behalf of some customers who have entered into financing arrangements with GE Capital. These off-balance sheet arrangements totaled approximately $4.1 billion at March 31, 2020. 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. We sometimes enter into consortium or similar arrangements for certain projects primarily in our Oilfield Equipment segment. Under such arrangements, each party is responsible for performing a certain scope of work within the total scope of the contracted work, and the obligations expire when all contractual obligations are completed. The failure or inability, financially or otherwise, of any of the parties to perform their obligations could impose additional cost and obligations on us. These factors could result in unanticipated costs to complete the project, liquidated damages or contract disputes.
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Leases (Tables) |
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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)Leases with a term of one year or less, including leases with a term of one month or less
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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 |
(1)All of our investment securities are classified as available for sale instruments. Non-U.S. debt securities mature within three years. (2)Gains (losses) recorded to earnings related to these securities were $(13) million and $10 million for the three months ended March 31, 2020 and 2019, 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 in the condensed consolidated statements of income (loss).
(1)Excludes gains of $7 million and losses of $2 million on embedded derivatives for the three months ended March 31, 2020 and 2019, respectively, as embedded derivatives are not considered to be hedging instruments in our economic hedges. (2)The effect on earnings of derivatives not designated as hedges is substantially offset by the change in fair value of the economically hedged items in the current and future periods.
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Income Taxes |
3 Months Ended |
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Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXESFor the three months ended March 31, 2020, income tax expense was $8 million compared to tax expense of $67 million for the prior year period. The difference between the U.S. statutory tax rate of 21% and the current effective tax rate is primarily related to non-deductible goodwill impairment and losses with no tax benefit due to valuation allowances. 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.In response to the COVID-19 pandemic, many governments have enacted or are contemplating measures to provide aid and economic stimulus. These measures may include deferring the due dates of tax payments or other changes to their income and non-income-based tax laws. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020 in the U.S., includes measures to assist companies, including temporary changes to income and non-income-based tax laws. For the three months ended March 31, 2020, there were no material tax impacts to our condensed consolidated financial statements as it relates to COVID-19 measures. We continue to monitor additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service and others. |
Progress Collections and Deferred Income |
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition and Deferred Revenue [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 March 31, 2020 and 2019, the aggregate amount of the transaction price allocated to the unsatisfied (or partially unsatisfied) performance obligations was $22.7 billion and $20.5 billion, respectively. As of March 31, 2020, we expect to recognize revenue of approximately 53%, 67% and 91% 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 March 31, 2020 and 2019 that was included in the contract liabilities at the beginning of the period was $410 million and $553 million, respectively.
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