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.
|
| | | | | | | | | | | |
| 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 |
|
(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. |
