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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
þ
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2019
OR
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-09397
Baker Hughes, a GE company, LLC
(Exact name of registrant as specified in its charter)
Delaware
76-0207995
(State or other jurisdiction
(I.R.S. Employer Identification No.)
of incorporation or organization)
 
 
 
17021 Aldine Westfield, Houston, Texas - 77073-5101
(Address of principal executive offices)
Registrant's telephone number, including area code: (713) 439-8600
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES þ NO o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
YES þ NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer" "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ
Smaller reporting company o
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES o NO þ
As of April 23, 2019, all of the common units of the registrant are held by affiliates of the registrant. None of the common units are publicly traded.



Baker Hughes, a GE company, LLC
Table of Contents

 
 
Page No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


                                
BHGE LLC 2019 First Quarter FORM 10-Q | i



PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Baker Hughes, a GE company, LLC
Condensed Consolidated Statements of Income (Loss)
(Unaudited)


Three Months Ended March 31,
(In millions, except per unit amounts)
2019
2018
Revenue:



Sales of goods
$
3,202

$
3,160

Sales of services
2,413

2,239

Total revenue
5,615

5,399





Costs and expenses:



Cost of goods sold
2,810

2,800

Cost of services sold
1,829

1,758

Selling, general and administrative expenses
704

674

Restructuring, impairment and other
62

162

Separation and merger related costs
34

46

Total costs and expenses
5,439

5,440

Operating income (loss)
176

(41
)
Other non operating income, net
21

2

Interest expense, net
(59
)
(46
)
Income (loss) before income taxes and equity in loss of affiliate
138

(85
)
Equity in loss of affiliate

(20
)
Provision for income taxes
(67
)
(38
)
Net income (loss)
71

(143
)
Less: Net income attributable to noncontrolling interests
6


Net income (loss) attributable to Baker Hughes, a GE company, LLC
$
65

$
(143
)










Cash distribution per common unit
$
0.18

$
0.18

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

                                
BHGE LLC 2019 First Quarter FORM 10-Q | 1



Baker Hughes, a GE company, LLC
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)

 
Three Months Ended March 31,
(In millions)
2019
2018
Net income (loss)
$
71

$
(143
)
Less: Net income attributable to noncontrolling interests
6


Net income (loss) attributable to Baker Hughes, a GE company, LLC
65

(143
)
Other comprehensive income:
 
 
Investment securities
2


Foreign currency translation adjustments
166

312

Cash flow hedges
4

7

Benefit plans

(3
)
Other comprehensive income
172

316

Less: Other comprehensive income attributable to noncontrolling interests


Other comprehensive income attributable to Baker Hughes, a GE company, LLC
172

316

Comprehensive income
243

173

Less: Comprehensive income attributable to noncontrolling interests
6


Comprehensive income attributable to Baker Hughes, a GE company, LLC
$
237

$
173

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

                                
BHGE LLC 2019 First Quarter FORM 10-Q | 2



Baker Hughes, a GE company, LLC
Condensed Consolidated Statements of Financial Position
(Unaudited)
(In millions)
March 31, 2019
December 31, 2018
ASSETS
Current assets:
 
 
Cash and cash equivalents (1)
$
3,067

$
3,677

Current receivables, net
6,402

6,062

Inventories, net
4,871

4,620

All other current assets
630

639

Total current assets
14,970

14,998

Property, plant and equipment (net of accumulated depreciation of $3,854 and $3,625)
6,218

6,228

Goodwill
20,468

20,423

Other intangible assets, net
5,663

5,719

Contract and other deferred assets
1,808

1,894

All other assets
2,808

1,900

Deferred income taxes
997

1,072

Total assets (1)
$
52,932

$
52,234

LIABILITIES AND EQUITY
Current liabilities:
 
 
Accounts payable
$
3,919

$
4,018

Short-term debt and current portion of long-term debt (1)
906

942

Progress collections and deferred income
1,923

1,765

All other current liabilities
2,274

2,276

Total current liabilities
9,022

9,001

Long-term debt
6,270

6,285

Deferred income taxes
42

94

Liabilities for pensions and other postretirement benefits
1,033

1,018

All other liabilities
1,599

960

Members' equity:


Members' capital (common units 1,036 and 1,035 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively)
37,432

37,582

Retained loss
(288
)
(354
)
Accumulated other comprehensive loss
(2,290
)
(2,462
)
Baker Hughes, a GE company, LLC members' equity
34,854

34,766

Noncontrolling interests
112

110

Total equity
34,966

34,876

Total liabilities and equity
$
52,932

$
52,234

(1) 
Total assets include $861 million and $896 million of assets held on behalf of General Electric Company, of which $717 million and $747 million is cash and cash equivalents and $144 million and $149 million is investment securities at March 31, 2019 and December 31, 2018, respectively, and a corresponding amount of liability is reported in short-term borrowings. See "Note 15. Related Party Transactions" for further details.
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

                                
BHGE LLC 2019 First Quarter FORM 10-Q | 3



Baker Hughes, a GE company, LLC
Condensed Consolidated Statements of Changes in Members' Equity
(Unaudited)
(In millions, except per unit amounts)
Common Unitholders
Retained
Loss
Accumulated
Other
Comprehensive
Loss
Non-controlling
Interests
Total Equity
Balance at December 31, 2018
$
37,582

$
(354
)
$
(2,462
)
$
110

$
34,876

Comprehensive income:
 
 
 
 
 
Net income
 
65

 
6

71

Other comprehensive income
 
 
172

 
172

Regular cash distribution to members ($0.18 per unit)
(187
)



 
(187
)
BHGE stock-based compensation cost
40

 
 
 
40

Other
(3
)
1


(4
)
(6
)
Balance at March 31, 2019
$
37,432

$
(288
)
$
(2,290
)
$
112

$
34,966


(In millions, except per unit amounts)
Common Unitholders
Retained
Loss
Accumulated
Other
Comprehensive
Loss
Non-controlling
Interests
Total Equity
Balance at December 31, 2017
$
40,678

$
(541
)
$
(1,881
)
$
140

$
38,396

Effect of adoption of ASU 2016-16 on taxes


67



67

Comprehensive income (loss):
 
 
 
 
 
Net loss


(143
)

 
(143
)
Other comprehensive income



316


316

Regular cash distribution to members ($0.18 per unit)
(203
)



 
(203
)
Repurchase and cancellation of common units
(500
)



(500
)
BHGE stock-based compensation cost
30




30

Other
7



(1
)
6

Balance at March 31, 2018
$
40,012

$
(617
)
$
(1,565
)
$
139

$
37,969

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.




                                
BHGE LLC 2019 First Quarter FORM 10-Q | 4



Baker Hughes, a GE company, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)

Three Months Ended March 31,
(In millions)
2019
2018
Cash flows from operating activities:
 
 
Net income (loss)
$
71

$
(143
)
Adjustments to reconcile net income (loss) to net cash flows from (used in) operating activities:
 
 
Depreciation and amortization
350

388

Provision for deferred income taxes
(18
)
(99
)
Changes in operating assets and liabilities:


Current receivables
(192
)
125

Inventories
(220
)
(134
)
Accounts payable
(63
)
114

Progress collections and deferred income
62

(124
)
Contract and other deferred assets
61

140

Other operating items, net
(194
)
23

Net cash flows from (used in) operating activities
(143
)
290

Cash flows from investing activities:
 
 
Expenditures for capital assets
(294
)
(177
)
Proceeds from disposal of assets
59

108

Other investing items, net
(21
)
(66
)
Net cash flows used in investing activities
(256
)
(135
)
Cash flows from financing activities:
 
 
Net repayments of short-term debt and other borrowings
(36
)
(181
)
Repayment of long-term debt
(12
)
(648
)
Distributions to members
(187
)
(203
)
Repurchase of common units

(524
)
Other financing items, net
2

(5
)
Net cash flows used in financing activities
(233
)
(1,561
)
Effect of currency exchange rate changes on cash and cash equivalents
22

(6
)
Decrease in cash and cash equivalents
(610
)
(1,412
)
Cash and cash equivalents, beginning of period
3,677

7,026

Cash and cash equivalents, end of period
$
3,067

$
5,614

Supplemental cash flows disclosures:


Income taxes paid
$
76

$
82

Interest paid
$
56

$
72


See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

                                
BHGE LLC 2019 First Quarter FORM 10-Q | 5



Baker Hughes, a GE company, LLC
Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF THE BUSINESS
Baker Hughes, a GE company, LLC, a Delaware limited liability company (the Company, BHGE LLC, we, us, or our), and the successor to Baker Hughes Incorporated, a Delaware corporation (Baker Hughes) is a fullstream oilfield technology provider that has a unique mix of equipment and service capabilities. We conduct business in more than 120 countries and employ approximately 67,000 employees.
On July 3, 2017, we completed the combination of the oil and gas business (GE O&G) of General Electric Company (GE) and Baker Hughes (the Transactions). As of March 31, 2019, GE owns approximately 50.3% of our common units and Baker Hughes, a GE company (BHGE) owns approximately 49.7% of our common units.
BASIS OF PRESENTATION
In connection with the Transactions, we entered into and are governed by an Amended & Restated Limited Liability Company Agreement, dated as of July 3, 2017 (the BHGE LLC Agreement). Under the BHGE LLC Agreement, EHHC Newco, LLC (EHHC), a wholly owned subsidiary of BHGE, is our sole managing member and BHGE is the sole managing member of EHHC. As our managing member, EHHC conducts, directs and exercises full control over all our activities, including our day-to-day business affairs and decision-making, without the approval of any other member. As such, EHHC is responsible for all our operational and administrative decisions and the day-to-day management of our business.
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. and such principles, U.S. GAAP) and pursuant to the rules and regulations of the SEC for interim financial information. Accordingly, certain information and disclosures normally included in our annual financial statements have been condensed or omitted. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated and combined financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018.
In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of operations, financial position and cash flows of the Company and its subsidiaries for the periods presented and are not indicative of the results that may be expected for a full year. The Company's financial statements have been prepared on a consolidated basis. Under this basis of presentation, our financial statements consolidate all of our subsidiaries (entities in which we have a controlling financial interest, most often because we hold a majority voting interest). All intercompany accounts and transactions have been eliminated.
In the Company's financial statements and notes, certain amounts have been reclassified to conform with the current year presentation. In the notes to unaudited condensed consolidated financial statements, all dollar and unit amounts in tabulations are in millions of dollars and units, respectively, unless otherwise indicated. Certain columns and rows in our financial statements and notes thereto may not add due to the use of rounded numbers.
In June 2018, GE announced their intention to pursue an orderly separation from BHGE over time. In the three months ended March 31, 2019, separation and merger related costs primarily include costs incurred in connection with the finalization of the Master Agreement Framework and costs related to the anticipated separation from GE. In the three months ended March 31, 2018, separation and merger related costs includes all costs associated with the Transactions. See "Note 15. Related Party Transactions" for further information on the Master Agreement Framework.

                                
BHGE LLC 2019 First Quarter FORM 10-Q | 6



Baker Hughes, a GE company, LLC
Notes to Unaudited Condensed Consolidated Financial Statements

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 Annual Report on Form 10-K for the year ended December 31, 2018 (2018 Annual Report) for the discussion of our significant accounting policies. Please refer to the "New Accounting Standards Adopted" section of this Note for changes to our accounting policies.
Cash and Cash Equivalents
As of March 31, 2019 and December 31, 2018, we had $1,214 million and $1,208 million, respectively, of cash held in bank accounts that cannot be released, transferred or otherwise converted into a currency that is regularly transacted internationally, due to lack of market liquidity, capital controls or similar monetary or exchange limitations limiting the flow of capital out of the jurisdiction. These funds are available to fund operations and growth in these jurisdictions and we do not currently anticipate a need to transfer these funds to the U.S. Included in these amounts are $432 million and $461 million, as of March 31, 2019 and December 31, 2018, respectively, held on behalf of GE.
Cash and cash equivalents includes a total of $717 million and $747 million of cash at March 31, 2019 and December 31, 2018, respectively, held on behalf of GE, and a corresponding liability is reported in short-term borrowings. See "Note 15. Related Party Transactions" for further details.
NEW ACCOUNTING STANDARDS ADOPTED
Leases
On January 1, 2019, we adopted Accounting Standards Update (ASU) No. 2016-02, Leases, and the related amendments (ASC 842). This ASU requires lessees to recognize an operating lease asset and a lease liability on the balance sheet, with the exception of short-term leases. We adopted the standard using the modified retrospective approach under which leases existing at, or entered into after January 1, 2019 were required to be recognized and measured. Prior period amounts have not been adjusted and continue to be reflected in accordance with our historical accounting. The Company has elected the practical expedients upon transition that allow entities not to reassess lease identification, classification and initial direct costs for leases that existed prior to adoption. 
The most significant impact of the standard is the recognition of right-of-use (ROU) assets and operating lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. We implemented internal controls and key system functionality to enable the preparation of financial information on adoption.
We determine if an arrangement is a lease at inception. ROU assets are included in "All other assets" and operating lease liabilities are included in "All other current liabilities" and "All other liabilities" on our consolidated statement of financial position. Finance lease assets are included in "Property, plant and equipment," and finance lease liabilities are included in "Short-term debt," and "Long-term debt" on our consolidated statement of financial position.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at the later of the lease commencement date or the effective date of adoption of ASC 842 on January 1, 2019, based on the present value of lease payments over the remaining lease term. Finance lease ROU assets and liabilities are recognized at commencement date. As most of our leases do not provide an implicit rate, we use our incremental collateralized borrowing rate based on the information available at commencement date in determining the present value of lease payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Short-term leases under one year do not result in a ROU asset, but are recognized in the income statement only on a straight-line basis over the lease term. The Company

                                
BHGE LLC 2019 First Quarter FORM 10-Q | 7



Baker Hughes, a GE company, LLC
Notes to Unaudited Condensed Consolidated Financial Statements

has made an election to include within our operating lease liability future payments for both lease and non-lease components. See "Note 8. Leases" for additional information.
The adoption of this standard resulted in the recording of ROU assets and operating lease liabilities of $844 million as of January 1, 2019 on our consolidated statements of financial position with an immaterial impact on our consolidated statements of equity and no related impact on our consolidated statements of income (loss). Short-term leases have not been recorded on the consolidated statements of financial position. Our accounting for finance leases remained substantially unchanged.
Derivatives and Hedging

On January 1, 2019, we adopted ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. Since there was no impact from the new guidance to our consolidated financial statements, no transition adjustments were recorded. ASU 2017-12 simplifies the application of hedge accounting and expands the strategies that qualify for hedge accounting. In accordance with the ASU, both the effective and ineffective portion of a cash flow hedge are initially reported as a component of accumulated other comprehensive income (loss) and reclassified into earnings when the forecasted transaction affects earnings. The ASU requires certain changes to the presentation of hedge accounting in the financial statements and some new or modified disclosures. See "Note 13. Financial Instruments" for additional information.
NEW ACCOUNTING STANDARDS TO BE ADOPTED
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses. The ASU introduces a new accounting model, the Current Expected Credit Losses model (CECL), which requires earlier recognition of credit losses and additional disclosures related to credit risk. The CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses for loans and other receivables at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. This model replaces the multiple existing impairment models in current U.S. GAAP, which generally require that a loss be incurred before it is recognized. The new standard will also apply to receivables arising from revenue transactions such as contract assets and accounts receivables and is effective for fiscal years beginning after December 15, 2019. We continue to evaluate the effect of the standard on our consolidated financial statements.
All other new accounting pronouncements that have been issued but not yet effective are currently being evaluated and at this time are not expected to have a material impact on our financial position or results of operations.
NOTE 2. REVENUE RELATED TO CONTRACTS WITH CUSTOMERS
DISAGGREGATED REVENUE
We disaggregate our revenue from contracts with customers by primary geographic markets.
 
Three Months Ended March 31,
Total Revenue
2019
2018
U.S.
$
1,505

$
1,483

Non-U.S.
4,110

3,916

Total
$
5,615

$
5,399



                                
BHGE LLC 2019 First Quarter FORM 10-Q | 8



Baker Hughes, a GE company, LLC
Notes to Unaudited Condensed Consolidated Financial Statements

REMAINING PERFORMANCE OBLIGATIONS
As of March 31, 2019 and 2018, the aggregate amount of the transaction price allocated to the unsatisfied (or partially unsatisfied) performance obligations was $20.5 billion and $21.3 billion, respectively. As of March 31, 2019, we expect to recognize revenue of approximately 47%, 62% and 89% of the total remaining performance obligations within 2, 5, and 15 years, respectively, and the remaining thereafter. Contract modifications could affect both the timing to complete as well as the amount to be received as we fulfill the related remaining performance obligations.
NOTE 3. CURRENT RECEIVABLES
Current receivables are comprised of the following:
 
March 31, 2019
December 31, 2018
Customer receivables
$
5,305

$
4,974

Related parties
718

746

Other
714

669

Total current receivables
6,737

6,389

Less: Allowance for doubtful accounts
(335
)
(327
)
Total current receivables, net
$
6,402

$
6,062


Customer receivables are recorded at the invoiced amount. Related parties consists primarily of amounts owed to us by GE. The "Other" category consists primarily of indirect taxes, customer retentions, other tax receivables and advance payments to suppliers.
NOTE 4. INVENTORIES
Inventories, net of reserves of $438 million and $430 million as of March 31, 2019 and December 31, 2018, respectively, are comprised of the following:
 
March 31, 2019
December 31, 2018
Finished goods
$
2,782

$
2,575

Work in process and raw material
2,089

2,045

Total inventories, net
$
4,871

$
4,620


We recorded inventory impairments of $61 million during the three months ended March 31, 2018 as a result of certain restructuring activities we initiated. Charges for inventory impairments are reported in the "Cost of goods sold" caption of the condensed consolidated statements of income (loss).

                                
BHGE LLC 2019 First Quarter FORM 10-Q | 9



Baker Hughes, a GE company, LLC
Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 5. GOODWILL AND OTHER INTANGIBLE ASSETS
GOODWILL
The changes in the carrying value of goodwill are detailed below by segment:

Oilfield Services
Oilfield Equipment
Turbo-machinery & Process Solutions
Digital Solutions
Total
Balance at December 31, 2017, gross
$
15,565

$
3,901

$
1,906

$
2,036

$
23,408

Accumulated impairment at December 31, 2017
(2,633
)
(867
)

(254
)
(3,754
)
Balance at December 31, 2017
12,932

3,034

1,906

1,782

19,654

Purchase accounting adjustments (1)
(157
)
293

394

429

959

Currency exchange and others
(26
)
(17
)
(114
)
(33
)
(190
)
Balance at December 31, 2018
12,749

3,310

2,186

2,178

20,423

Currency exchange and others

22

6

17

45

Balance at March 31, 2019
$
12,749

$
3,332

$
2,192

$
2,195

$
20,468


(1) 
Includes the final determination of fair value of the assets and liabilities and the related goodwill associated with the acquisition of Baker Hughes that was concluded in the second quarter of 2018. Of the total goodwill of $13,669 million resulting from the acquisition of Baker Hughes, $12,604 million is allocated to our Oilfield Services segment and the remainder to our other segments based on the expected benefit from the synergies of the acquisition.
We test goodwill for impairment annually in the third quarter using data as of July 1 of that year. Our reporting units are the same as our four reportable segments. We also test goodwill for impairment between annual impairment testing dates whenever events or circumstances occur that, in our judgment, could more likely than not reduce the fair value of one or more reporting units below its carrying amount. In assessing the possibility that a reporting unit’s fair value has been reduced below its carrying amount due to the occurrence of events or circumstances between annual impairment testing dates, we consider all available evidence, including, but not limited to, (i) the results of our impairment testing at the prior annual impairment testing date, in particular the magnitude of the excess of fair value over carrying value observed, (ii) downward revisions to internal forecasts, and the magnitude thereof, if any, (iii) the impact of the separation from GE, if any, and (iv) declines in the market capitalization of BHGE below its book value, and the magnitude and duration of those declines, if any. During the first quarter of 2019, we have not identified any events or circumstances that could more likely than not reduce the fair value of one or more of our reporting units below its carrying amount.
As of March 31, 2019, we believe that the goodwill is recoverable, however, there can be no assurances that sustained declines in macroeconomic or business conditions affecting our industry and business will not occur. The impairment testing involves significant management judgment and are based on assumptions about future commodity pricing, supply and demand for our goods and services, and market conditions, which are difficult to forecast in volatile economic environments. If actual results materially differ from the estimated assumptions utilized in our forecasts, we may need to record impairment charges in future periods.

                                
BHGE LLC 2019 First Quarter FORM 10-Q | 10



Baker Hughes, a GE company, LLC
Notes to Unaudited Condensed Consolidated Financial Statements

OTHER INTANGIBLE ASSETS
Intangible assets are comprised of the following:
 
March 31, 2019
December 31, 2018
 
Gross
Carrying
Amount
Accumulated
Amortization
Net
Gross
Carrying
Amount
Accumulated
Amortization
Net
Customer relationships
$
3,101

$
(983
)
$
2,118

$
3,085

$
(944
)
$
2,141

Technology
1,091

(557
)
534

1,107

(526
)
581

Trade names and trademarks
703

(237
)
466

698

(229
)
469

Capitalized software
1,169

(866
)
303

1,118

(824
)
294

Other
1

(1
)

14

(2
)
12

Finite-lived intangible assets
6,065

(2,644
)
3,421

6,022

(2,525
)
3,497

Indefinite-lived intangible assets (1)
2,242


2,242

2,222


2,222

Total intangible assets
$
8,307

$
(2,644
)
$
5,663

$
8,244

$
(2,525
)
$
5,719


(1) 
Indefinite-lived intangible assets are principally comprised of the Baker Hughes trade name.
Intangible assets are generally amortized on a straight-line basis with estimated useful lives ranging from 1 to 30 years. Amortization expense for the three months ended March 31, 2019 and 2018 was $96 million and $139 million, respectively.
Estimated amortization expense for the remainder of 2019 and each of the subsequent five fiscal years is expected to be as follows:
Year
Estimated Amortization Expense
Remainder of 2019
$
261

2020
329

2021
280

2022
237

2023
225

2024
218



                                
BHGE LLC 2019 First Quarter FORM 10-Q | 11



Baker Hughes, a GE company, LLC
Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 6. 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:
 
March 31, 2019
December 31, 2018
Long-term product service agreements
$
576

$
609

Long-term equipment contracts (1)
1,040

1,085

Contract assets (total revenue in excess of billings) (2)
1,616

1,694

Deferred inventory costs (3) 
144

179

Non-recurring engineering costs
48

21

Contract and other deferred assets
$
1,808

$
1,894

(1) 
Reflects revenue earned in excess of billings on our long-term contracts to construct technically complex equipment and certain other service agreements.
(2) 
Contract assets (total revenue in excess of billings) were $1,684 million as of January 1, 2018.
(3) 
Deferred inventory costs were $360 million as of January 1, 2018, which represents cost deferral for shipped goods and other costs where the criteria for revenue recognition has not yet been met.
Revenue recognized during the three months ended March 31, 2019 and 2018 from performance obligations satisfied (or partially satisfied) in previous periods related to our long-term service agreements was $7 million and $10 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.
NOTE 7. PROGRESS COLLECTIONS AND DEFERRED INCOME
Contract 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:
 
March 31, 2019
December 31, 2018
Progress collections
$
1,790

$
1,600

Deferred income
133

165

Progress collections and deferred income (contract liabilities) (1)
$
1,923

$
1,765

(1) 
Progress collections and deferred income (contract liabilities) were $1,775 million at January 1, 2018.
Revenue recognized during the three months ended March 31, 2019 and 2018 that was included in the contract liabilities at the beginning of the period was $553 million and $602 million, respectively.

                                
BHGE LLC 2019 First Quarter FORM 10-Q | 12



Baker Hughes, a GE company, LLC
Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 8. LEASES
Our leasing activities primarily consist of operating leases for administrative offices, manufacturing facilities, research centers, service centers, sales offices and certain equipment.
 
 
Operating Lease Expense
Three Months Ended March 31, 2019
Long-term fixed lease
$
48

Long-term variable lease
11

Short-term lease
123

Total operating lease expense
$
182


For the three months ended March 31, 2018, total operating lease expense was $147 million. Cash flows used in operating activities for operating leases approximates our expense for the three months ended March 31, 2019 and 2018.
As of March 31, 2019, maturities of our operating lease liabilities are as follows:
Year
Operating leases
Remainder of 2019
$
165

2020
194

2021
140

2022
113

2023
80

Thereafter
386

Total lease payments
1,078

Less: imputed interest
209

Total
$
869

 
 
   Amounts recognized in the condensed consolidated statement of financial position as of March 31, 2019:
 
Operating leases
All other current liabilities
$
194

All other liabilities
675

Total
$
869


ROU assets of $860 million as of March 31, 2019 were included in "All other assets" in our condensed consolidated statements of financial position.
The weighted-average remaining lease term as of March 31, 2019 was approximately nine years for our operating leases. The weighted-average discount rate used to determine the operating lease liability as of March 31, 2019 was 4.4%.

                                
BHGE LLC 2019 First Quarter FORM 10-Q | 13



Baker Hughes, a GE company, LLC
Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 9. BORROWINGS
Short-term and long-term borrowings are comprised of the following:
 
March 31, 2019
December 31, 2018
Short-term borrowings
 
 
Short-term borrowings from GE
$
861

$
896

Other borrowings
45

46

Total short-term borrowings
906

942

 
 
 
Long-term borrowings
 
 
3.2% Senior Notes due August 2021
522

523

   2.773% Senior Notes due December 2022
1,245

1,245

8.55% Debentures due June 2024
130

131

   3.337% Senior Notes due December 2027
1,343

1,343

6.875% Notes due January 2029
292

294

5.125% Senior Notes due September 2040
1,305

1,306

4.08% Senior Notes due December 2047
1,336

1,336

Other long-term borrowings
97

107

Total long-term borrowings
6,270

6,285

Total borrowings
$
7,176

$
7,227


We have a $3 billion committed unsecured revolving credit facility (the 2017 Credit Agreement) with commercial banks maturing in July 2022. The 2017 Credit Agreement contains certain customary representations and warranties, certain affirmative covenants and no negative covenants. Upon the occurrence of certain events of default, our obligations under the 2017 Credit Agreement may be accelerated. Such events of default include payment defaults to lenders under the 2017 Credit Agreement, and other customary defaults. No such events of default have occurred. At March 31, 2019 and December 31, 2018, there were no borrowings under the 2017 Credit Agreement.
We have a commercial paper program under which we may issue from time to time up to $3 billion in commercial paper with maturities of no more than 397 days. At March 31, 2019 and December 31, 2018, there were no borrowings outstanding under the commercial paper program. The maximum combined borrowing at any time under both the 2017 Credit Agreement and the commercial paper program is $3 billion.
Concurrent with the Transactions associated with the acquisition of Baker Hughes on July 3, 2017, Baker Hughes Co-Obligor, Inc. became a co-obligor, jointly and severally with us, on our registered debt securities.  This co-obligor is a 100%-owned finance subsidiary of the Company that was incorporated for the sole purpose of serving as a co-obligor of debt securities and has no assets or operations other than those related to its sole purpose. Baker Hughes Co-Obligor, Inc. is also a co-obligor of the $3,950 million senior notes issued in December 2017 by us in a private placement and subsequently registered in January 2018.
Certain Senior Notes contain covenants that restrict our ability to take certain actions, including, but not limited to, the creation of certain liens securing debt, the entry into certain sale-leaseback transactions and engaging in certain merger, consolidation and asset sale transactions in excess of specified limits.
The estimated fair value of total borrowings at March 31, 2019 and December 31, 2018 was $6,966 million and $6,629 million, respectively. For a majority of our borrowings the fair value was determined using quoted period-end market prices. Where market prices are not available, we estimate fair values based on valuation methodologies using current market interest rate data adjusted for our non-performance risk.
See "Note 15. Related Party Transactions" for additional information on the short-term borrowings from GE.

                                
BHGE LLC 2019 First Quarter FORM 10-Q | 14



Baker Hughes, a GE company, LLC
Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 10. EMPLOYEE BENEFIT PLANS
In 2018, certain of our U.S. employees were covered under various U.S. GE employee benefit plans, including GE's retirement plans (pension, retiree health and life insurance, and savings benefit plans). Beginning in 2019, such employees ceased to participate in these GE U.S. plans. In addition, certain United Kingdom (UK) employees participate in the GE UK Pension Plan. We are allocated relevant participation costs for these GE employee benefit plans as part of multi-employer plans. As such, we have not recorded any liabilities associated with our participation in these plans. Expenses associated with our participation in these plans was $2 million and $37 million in the three months ended March 31, 2019 and 2018, respectively. In November 2018, the Company entered into an agreement with GE whereby GE will transfer the assets and liabilities of the GE UK Pension Plan related to the oil & gas businesses to BHGE on what is intended to be a fully funded basis. Subsequent to this transfer, BHGE employees shall cease to participate in the GE UK Pension Plan. This transfer is expected to close in 2019.
In addition to these GE plans, certain of our employees are also covered by company sponsored employee defined benefit plans. These defined benefit plans include four U.S. plans and six non-U.S. plans, primarily in the UK, Germany, and Canada, all with plan assets or obligations greater than $20 million. We use a December 31 measurement date for these plans. These defined benefit plans generally provide benefits to employees based on formulas recognizing length of service and earnings.
The components of net periodic cost (benefit) of plans sponsored by us are as follows for the three months ended March 31:

2019
2018
Service cost
$
4

$
5

Interest cost
19

18

Expected return on plan assets
(25
)
(30
)
Amortization of net actuarial loss
4

2

Net periodic cost (benefit)
$
2

$
(5
)

The service cost component of the net periodic cost (benefit) is included in operating income (loss) and all other components are included in non operating income (loss) in our condensed consolidated statements of income (loss).
NOTE 11. INCOME TAXES
For the quarter ended March 31, 2019, income tax expense was $67 million compared to $38 million for the prior year quarter. The difference between the U.S. statutory tax rate of 21% and the current effective tax rate is primarily related to the geographical mix of earnings and losses, coupled with $21 million related to losses with no tax benefit due to valuation allowances.
NOTE 12. MEMBERS' EQUITY
COMMON UNITS
The BHGE LLC Agreement provides that initially there is one class of common units, which are currently held by BHGE and GE. If BHGE issues a share of Class A common stock, including in connection with an equity incentive or similar plan, we will also issue a corresponding common unit to BHGE or one of its direct subsidiaries. For the three months ended March 31, 2019 we issued $1,541 thousand common units to BHGE in connection with the issuance of Class A common stock by BHGE.

                                
BHGE LLC 2019 First Quarter FORM 10-Q | 15



Baker Hughes, a GE company, LLC
Notes to Unaudited Condensed Consolidated Financial Statements

The following table presents the changes in the number of common units outstanding (in thousands):
 
Common Units Held by BHGE
Common Units Held by GE
Balance at December 31, 2018
513,399

521,543

Issue of units to BHGE under equity incentive plan
1,541


Balance at March 31, 2019
514,940

521,543

ACCUMULATED OTHER COMPREHENSIVE LOSS (AOCL)
The following tables present the changes in accumulated other comprehensive loss, net of tax:
 
Investment Securities
Foreign Currency Translation Adjustments
Cash Flow Hedges
Benefit Plans
Accumulated Other Comprehensive Loss
Balance at December 31, 2018
$

$
(2,326
)
$
(3
)
$
(133
)
$
(2,462
)
Other comprehensive income (loss) before reclassifications
2

166

5

(2
)
171

Amounts reclassified from accumulated other comprehensive income (loss)



1

1

Deferred taxes


(1
)
1


Other comprehensive income
2

166

4


172

Less: Other comprehensive income attributable to noncontrolling interests





Balance at March 31, 2019
$
2

$
(2,160
)
$
1

$
(133
)
$
(2,290
)

 
Investment Securities
Foreign Currency Translation Adjustments
Cash Flow Hedges
Benefit Plans
Accumulated Other Comprehensive Loss
Balance at December 31, 2017
$
1

$
(1,824
)
$
2

$
(60
)
$
(1,881
)
Other comprehensive income (loss) before reclassifications

312

8

(3
)
317

Amounts reclassified from accumulated other comprehensive income (loss)





Deferred taxes


(1
)

(1
)
Other comprehensive income (loss)

312

7

(3
)
316

Less: Other comprehensive income (loss) attributable to noncontrolling interests





Balance at March 31, 2018
$
1

$
(1,512
)
$
9

$
(63
)
$
(1,565
)

The amounts reclassified from accumulated other comprehensive loss during the three months ended March 31, 2019 represent amortization of net actuarial gain (loss) which are included in the computation of net periodic pension cost (see "Note 10. Employee Benefit Plans" for additional details). These reclassifications are recorded across the various cost and expense line items within the condensed consolidated statements of income (loss).

                                
BHGE LLC 2019 First Quarter FORM 10-Q | 16



Baker Hughes, a GE company, LLC
Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 13. FINANCIAL INSTRUMENTS
RECURRING FAIR VALUE MEASUREMENTS
Our assets and liabilities measured at fair value on a recurring basis consists of derivative instruments and investment securities.
 
March 31, 2019
December 31, 2018
 
Level 1
Level 2
Level 3
 
Net Balance
Level 1
Level 2
Level 3
Net Balance
Assets
 

 

 

 
 
 
 
 
 
Derivatives
$

$
55

$

 
$
55

$

$
74

$

$
74

   Investment securities
49


290

 
339

39


288

327

Total assets
49

55

290

 
394

39

74

288

401

 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
Derivatives

(47
)

 
(47
)

(82
)

(82
)
Total liabilities
$

$
(47
)
$

 
$
(47
)
$

$
(82
)
$

$
(82
)

There were no transfers between Level 1, 2 and 3 during the three months ended March 31, 2019.
The following table provides a reconciliation of recurring Level 3 fair value measurements for investment securities:
 
2019
2018
Balance at January 1
$
288

$
304

Purchases
6

34

Proceeds at maturity
(6
)
(12
)
Unrealized gains recognized in AOCI
2


Balance at March 31
$
290

$
326


The most significant unobservable input used in the valuation of our Level 3 instruments is the discount rate. Discount rates are determined based on inputs that market participants would use when pricing investments, including credit and liquidity risk. An increase in the discount rate would result in a decrease in the fair value of our investment securities. There are no unrealized gains or losses recognized in the condensed consolidated statement of income (loss) on account of any Level 3 instrument still held at the reporting date. At March 31, 2019 and December 31, 2018, we held $144 million and $149 million, respectively, of these investment securities on behalf of GE.
 
March 31, 2019
December 31, 2018
 
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Estimated Fair Value
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Estimated Fair Value
Investment securities
 

 

 

 
 

 

 

 
  Non-U.S. debt securities (1)
$
288

$
2

$

$
290

$
288

$

$

$
288

  Equity securities (2)
49



49

39



39

Total
$
337

$
2

$

$
339

$
327

$

$

$
327

(1) 
All of our investment securities are classified as available for sale instruments. Non-U.S. debt securities mature within four years.
(2) 
Gains (losses) recorded to earnings related to these securities were $10 million and $(13) million for the three months ended March 31, 2019 and 2018, respectively.

                                
BHGE LLC 2019 First Quarter FORM 10-Q | 17



Baker Hughes, a GE company, LLC
Notes to Unaudited Condensed Consolidated Financial Statements

FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS
Our financial instruments include cash, cash equivalents, current receivables, investments, accounts payable, short and long-term debt, and derivative financial instruments. Except for long-term debt, the estimated fair value of these financial instruments at March 31, 2019 and December 31, 2018 approximates their carrying value as reflected in our condensed consolidated financial statements. For further information on the fair value of our debt, see "Note 9. Borrowings."
DERIVATIVES AND HEDGING
We use derivatives to manage our risks and do not use derivatives for speculation.
The table below summarizes the fair value of all derivatives, including hedging instruments and embedded derivatives.
 
March 31, 2019
December 31, 2018
 
Assets
(Liabilities)
Assets
(Liabilities)
Derivatives accounted for as hedges
 
 
 
 
Currency exchange contracts
$
1

$

$

$
(7
)
 
 
 
 
 
Derivatives not accounted for as hedges
 
 
 
 
Currency exchange contracts
52

(46
)
74

(75
)
Commodity derivatives
2




Other derivatives

(1
)


Total derivatives
$
55

$
(47
)
$
74

$
(82
)

Derivatives are classified in the captions "All other current assets," "All other assets," "All other current liabilities," and "All other liabilities" depending on their respective maturity date.
As of March 31, 2019 and December 31, 2018, $50 million and $67 million of derivative assets are recorded in "All other current assets" and $5 million and $7 million are recorded in "All other assets" of the condensed consolidated statements of financial position, respectively. As of March 31, 2019 and December 31, 2018, $44 million and $79 million of derivative liabilities are recorded in "All other current liabilities" and $3 million and $3 million are recorded in "All other liabilities" of the condensed consolidated statements of financial position, respectively.
RISK MANAGEMENT STRATEGY
We buy, manufacture and sell components and products as well as provide services across global markets. These activities expose us to changes in foreign currency exchange rates and commodity prices, which can adversely affect revenues earned and costs of operating our business. When the currency in which we sell equipment differs from the primary currency (known as its functional currency) and the exchange rate fluctuates, it will affect the revenue we earn on the sale. These sales and purchase transactions also create receivables and payables denominated in foreign currencies, along with other monetary assets and liabilities, which expose us to foreign currency gains and losses based on changes in exchange rates. Changes in the price of a raw material that we use in manufacturing can affect the cost of manufacturing. We use derivatives to mitigate or eliminate these exposures.
FORMS OF HEDGING
Cash Flow Hedges
We use cash flow hedging primarily to reduce or eliminate the effects of foreign exchange rate changes on purchase and sale contracts. Accordingly, the vast majority of our derivative activity in this category consists of currency exchange contracts. We also use commodity derivatives to reduce or eliminate price risk on raw materials

                                
BHGE LLC 2019 First Quarter FORM 10-Q | 18



Baker Hughes, a GE company, LLC
Notes to Unaudited Condensed Consolidated Financial Statements

purchased for use in manufacturing.
Economic Hedges
These derivatives are not designated as hedges from an accounting standpoint (and therefore we do not apply hedge accounting to the relationship) but otherwise serve the same economic purpose as other hedging arrangements. Some economic hedges are used when changes in the carrying amount of the hedged item are already recorded in earnings in the same period as the derivative, making hedge accounting unnecessary. For some other types of economic hedges, changes in the fair value of the derivative are recorded in earnings currently but changes in the value of the forecasted foreign currency cash flows are only recognized in earnings when they occur. As a result, even though the derivative is an effective economic hedge, there is a net effect on earnings in each period due to differences in the timing of earnings recognition between the derivative and the hedged item. These derivatives are marked to fair value through earnings each period.
NOTIONAL AMOUNT OF DERIVATIVES
The notional amount of a derivative is the number of units of the underlying (for example, the notional principal amount of the debt in an interest rate swap). A substantial majority of the outstanding notional amount of $5.4 billion and $6.4 billion at March 31, 2019 and December 31, 2018, respectively, is related to hedges of anticipated sales and purchases in foreign currency, commodity purchases, and contractual terms in contracts that are considered embedded derivatives and for intercompany borrowings in foreign currencies. We generally disclose derivative notional amounts on a gross basis to indicate the total counterparty risk. Where we have gross purchase and sale derivative contracts for a particular currency, we look to execute these contracts with the same counterparty to reduce our exposure. The corresponding net notional amounts were $2.9 billion and $2.8 billion at March 31, 2019 and December 31, 2018, respectively.
CASH FLOW HEDGES
Changes in the fair value of cash flow hedges are recorded in a separate component of equity (referred to below as Accumulated Other Comprehensive Income, or AOCI) and are recorded in earnings in the period in which the hedged transaction occurs. The table below summarizes this activity by hedging instrument.
 
Three Months Ended March 31,
 
Gain (Loss) Recognized in AOCI
Gain (Loss) Reclassified from AOCI to Earnings
 
2019
2018
2019
2018
Currency exchange contracts
$
5

$
8

$

$

We expect to transfer $1 million to earnings as an income in the next 12 months contemporaneously with the earnings effects of the related forecast transactions. At March 31, 2019 and December 31, 2018, the maximum term of derivative instruments that hedge forecast transactions was one year and two years, respectively.

                                
BHGE LLC 2019 First Quarter FORM 10-Q | 19



Baker Hughes, a GE company, LLC
Notes to Unaudited Condensed Consolidated Financial Statements

ECONOMIC HEDGES
The following table summarizes the gains (losses) from derivatives not designated as hedges on the condensed consolidated statements of income (loss) for the three months ended March 31, 2019 and 2018.
Derivatives not designated as hedging instruments
Condensed consolidated statement of income caption
Three Months Ended March 31,
2019
2018
Currency exchange contracts (1)
Cost of goods sold
$
3

$
41

Currency exchange contracts
Selling, general and administrative expenses
(1
)
(24
)
Commodity derivatives
Cost of goods sold
2


Other derivatives
Other non operating income, net
(1
)

Total (2)
 
$
3

$
17

(1) 
Excludes losses on embedded derivatives of $2 million and $39 million for the three months ended March 31, 2019 and 2018, 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 change in fair value of the economically hedged items in the current and future periods.
COUNTERPARTY CREDIT RISK
Fair values of our derivatives can change significantly from period to period based on, among other factors, market movements and changes in our positions. We manage counterparty credit risk (the risk that counterparties will default and not make payments to us according to the terms of our agreements) on an individual counterparty basis.
NOTE 14. SEGMENT INFORMATION
Our operating segments are organized based on the nature of markets and customers. We report our operating results through four operating segments that consists of similar products and services within each segment as described below.
OILFIELD SERVICES (OFS)
OFS provides products and services for onshore and offshore operations across the lifecycle of a well, ranging from drilling, evaluation, completion, production and intervention. Products and services include diamond and tri-cone drill bits, drilling services, including directional drilling technology, measurement while drilling & logging while drilling, downhole completion tools and systems, wellbore intervention tools and services, wireline services, drilling and completions fluids, oilfield and industrial chemicals, pressure pumping, and artificial lift technologies, including electrical submersible pumps.
OILFIELD EQUIPMENT (OFE)
OFE provides a broad portfolio of products and services required to facilitate the safe and reliable flow of hydrocarbons from the subsea wellhead to the surface. Products and services include pressure control equipment and services, subsea production systems and services, drilling equipment, and flexible pipeline systems. OFE designs and manufactures onshore and offshore drilling and production systems and equipment for floating production platforms and provides a full range of services related to onshore and offshore drilling activities.
TURBOMACHINERY & PROCESS SOLUTIONS (TPS)
TPS provides equipment and related services for mechanical-drive, compression and power-generation applications across the oil and gas industry as well as products and services to serve the downstream segments of the industry including refining, petrochemical, distributed gas, flow and process control and other industrial

                                
BHGE LLC 2019 First Quarter FORM 10-Q | 20



Baker Hughes, a GE company, LLC
Notes to Unaudited Condensed Consolidated Financial Statements

applications.  The TPS portfolio includes drivers (aero-derivative gas turbines, heavy-duty gas turbines and synchronous and induction electric motors), compressors (centrifugal and axial, direct drive high speed, integrated, subsea compressors, turbo expanders and reciprocating), turn-key solutions (industrial modules and waste heat recovery), pumps, valves, and compressed natural gas (CNG) and small-scale liquefied natural gas (LNG) solutions used primarily for shale oil and gas field development.
DIGITAL SOLUTIONS (DS)
DS provides equipment and services for a wide range of industries, including oil & gas, power generation, aerospace, metals, and transportation. The offerings include sensor-based measurement, non-destructive testing and inspection, turbine, generator and plant controls and condition monitoring, as well as pipeline integrity solutions.
SEGMENT RESULTS
Summarized financial information is shown in the following tables. Consistent accounting policies have been applied by all segments within the Company, for all reporting periods.
 
Three Months Ended March 31,
Segments revenue
2019
2018
Oilfield Services
$