Baker Hughes Co - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - January 24, 2018

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EX-99.1 - EXHIBIT 99.1 - Baker Hughes Coearningsreleaseexhibit9911.htm
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Exhibit 99.2

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News Release
Investor Contact:
Philipp Mueller, +1 281 809 9088, investor.relations@bhge.com

Media Contact:
Stephanie Cathcart, +1 202 549 6462, stephanie.cathcart@bhge.com
Melanie Kania, +1 713 439 8303, melanie.kania@bhge.com

Reconciliation of GAAP and Combined Business Basis measures used in Earnings Release*

On July 3, 2017, we closed our previously announced transaction to combine the Oil & Gas business of General Electric Company ("GE Oil & Gas") and Baker Hughes Incorporated ("Baker Hughes"). The Company presents its financial results in accordance with U.S. GAAP which includes the results of Baker Hughes and GE Oil & Gas from the merger closing date of July 3, 2017. However, management believes that using additional non-GAAP measures on a combined business basis will enhance the evaluation of the profitability of the Company and its ongoing operations. Combined business results combine the results of GE Oil & Gas with Baker Hughes as if the acquisition date had occurred on the first day of all periods presented. The acquisition of Baker Hughes impacts only the Oilfield Services and Digital Solutions segments.  Accordingly, no reconciliation is presented for our other segments, Oilfield Equipment and Turbomachinery & Process Solutions. All combined business results presented in this News Release are unaudited. Such combined business results are not prepared in accordance with Article 11 of Regulation S-X. The following tables reconcile BHGE GAAP financial information with combined business basis financial information (non-GAAP) used in the Earnings Release of BHGE for the quarter and year ended December 31, 2016, and the year ended December 31, 2017.
Three months ended December 31, 2016
(in millions)
GE O&G
 
Add: Baker Hughes(a) 
 
Combined Business Basis
Consolidated results
 
 
 
 
 
Orders
$
3,461

 
$
2,408

 
$
5,869

Revenue
3,516

 
2,408

 
5,924

Operating income/(loss) (GAAP)
284

 
(306
)
 
(22
)
Operating income/(loss) (adjusted)
377

 
(16
)
 
361

Corporate operating loss
(140
)
 
(41
)
 
(181
)
Inventory impairment
(6
)
 
(30
)
 
(36
)
Restructuring, impairment & other
(64
)
 
(241
)
 
(305
)
Merger and related costs
(23
)
 
(19
)
 
(42
)
Oilfield Services

 

 

Orders
$
217

 
$
2,318

 
$
2,535

Revenue
199

 
2,318

 
2,517

Operating income/(loss)
(40
)
 
33

 
(7
)
 

 

 

Digital Solutions

 

 

Orders
$
595

 
$
90

 
$
685

Revenue
576

 
90

 
666

Operating income/(loss)
115

 
(8
)
 
107

*Certain columns and rows may not sum up due to the use of rounded numbers.

1


Exhibit 99.2


Year ended December 31, 2017
(in millions)
BHGE
 
Add: Baker Hughes(a) (January 1, 2017 to July 3, 2017)
 
Combined Business Basis
Consolidated results

 

 
—

Orders
$
17,376

 
$
4,662

 
$
22,038

Revenue
17,259

 
4,662

 
21,921

Operating income/(loss) (GAAP)
(107
)
 
(126
)
 
(233
)
Operating income/(loss) (adjusted)
922

 
111

 
1,033

Corporate operating loss
(373
)
 
(76
)
 
(449
)
Inventory impairment and related charges
(244
)
 
—

 
(244
)
Restructuring, impairment & other
(412
)
 
(157
)
 
(569
)
Merger and related costs
(373
)
 
(80
)
 
(453
)
Oilfield Services

 

 


Orders
$
5,857

 
$
4,479

 
$
10,336

Revenue
5,851

 
4,479

 
10,330

Operating income/(loss)
71

 
224

 
295

 

 

 


Digital Solutions

 

 


Orders
$
2,734

 
$
182

 
$
2,916

Revenue
2,309

 
182

 
2,491

Operating income/(loss)
333

 
(38
)
 
295


Year ended December 31, 2016
(in millions)
GE O&G
 
Add: Baker Hughes(a)
 
Combined Business Basis
Consolidated results
 
 
 
 
 
Orders
$
11,273

 
$
9,833

 
$
21,106

Revenue
13,269

 
9,833

 
23,102

Operating income/(loss) (GAAP)
659

 
(1,925
)
 
(1,266
)
Operating income/(loss) (adjusted)
1,346

 
(735
)
 
611

Corporate operating loss
(380
)
 
(140
)
 
(520
)
Impairment of goodwill
—

 
(1,858
)
 
(1,858
)
Inventory impairment
(138
)
 
(617
)
 
(755
)
Restructuring, impairment & other
(516
)
 
(2,014
)
 
(2,531
)
Merger and related costs
(33
)
 
3,301

 
3,267

Oilfield Services

 

 


Orders
$
857

 
$
9,393

 
$
10,250

Revenue
799

 
9,393

 
10,192

Operating income/(loss)
(204
)
 
(559
)
 
(763
)
 

 

 


Digital Solutions

 

 


Orders
$
2,148

 
$
440

 
$
2,588

Revenue
2,086

 
440

 
2,526

Operating income/(loss)
355

 
(37
)
 
318


2


Exhibit 99.2


(a)Certain reclassifications and adjustments were performed to conform Baker Hughes results to the current BHGE presentation. These consist of the following:

•
Adjusted orders and revenue exclude royalty income of $2 million in the three months ended December 31, 2016 and $4 million and $8 million in the year ended December 31, 2017 and December 31, 2016, respectively.
•
Operating income (loss), both GAAP and adjusted, to exclude other income and royalties originally of $35 million and $2 million in three months ended December 31, 2016, respectively, $35 million and $4 million in the year ended December 31, 2017, respectively and $55 million and $8 million in the year ended December 31, 2016, respectively. Of the $35 million and $55 million of other income in the three months ended December 31, 2016 and the year ended December 31, 2016, $22 million and $24 million, respectively, was adjusted from corporate operating income.
•
Reclassified $67 million and $41 million of litigation charges in 2017 and 2016, respectively from operating income (corporate) to restructuring, impairment & other.
•
Reclassified $97 million of loss on sale of business from non-operating income to restructuring, impairment and other charges included in operating income in the three months and year ended December 31, 2016.
•
Reclassified $142 million of loss on extinguishment of debt from non-operating income to restructuring, impairment and other charges included in operating income in the year ended December 31, 2016.


3

Baker Hughes Co Reports