UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
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. ☐
Item 2.02 Results of Operations and Financial Condition.
On April 13, 2020, Baker Hughes Company (“Baker Hughes”) issued a press release providing a financial update for the quarter ended March 31, 2020. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
The information contained in this Current Report shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 2.05 Costs Associated with Exit or Disposal Activities.
The information set forth under Item 2.02 above is hereby incorporated into this Item 2.05 by reference.
Item 2.06 Material Impairments.
The information set forth under Item 2.02 above is hereby incorporated into this Item 2.06 by reference.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
| Exhibit No. | Description |
| 99.1* | News Release of Baker Hughes Company dated April 13, 2020 |
| 101.SCH* | Inline XBRL Schema Document |
| 101.CAL* | Inline XBRL Calculation Linkbase Document |
| 101.LAB* | Inline XBRL Label Linkbase Document |
| 101.PRE* | Inline XBRL Presentation Linkbase Document |
| 101.DEF* | Inline XBRL Definition Linkbase Document |
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Baker Hughes Company | |||||
| Date: | April 13, 2020 | By: | /s/ Lee Whitley | ||
| Name: | Lee Whitley | ||||
| Title: | Associate General Counsel and Corporate Secretary | ||||
| Baker Hughes, a GE company, LLC | |||||
| Date: | April 13, 2020 | By: | /s/ Lee Whitley | ||
| Name: | Lee Whitley | ||||
| Title: | Associate General Counsel and Corporate Secretary | ||||
Exhibit 99.1
Baker Hughes Announces Financial Update in Response to COVID-19 and Oil Price Environment
HOUSTON & LONDON -- (BUSINESS WIRE) – Apr. 13, 2020 – Baker Hughes (NYSE: BKR) (“Baker Hughes” or the “Company”) today announced a financial update in response to the significant decline in oil and gas prices and the COVID-19 pandemic. In addition to taking critical steps to reduce the spread and infection of the virus as well as mitigate the impact of this pandemic to its business operations, Baker Hughes is taking a number of actions in response to the current market environment, including the following:
| · | The Company has approved a plan that will result in restructuring, impairment, and other charges of approximately $1.8 billion, of which approximately $1.5 billion will be recorded in the first quarter of 2020. |
| · | Future cash expenditures associated with these charges are estimated to be approximately $0.5 billion with an expected payback within 1 year. These restructuring charges are designed to right-size our operations for anticipated activity levels and market conditions. |
| · | Approved a plan to reduce 2020 net capital expenditures by over 20% versus 2019 net capital expenditures. |
| · | The Company expects to record a non-cash goodwill impairment charge of approximately $15 billion in the first quarter of 2020. Further explanation below.* |
Baker Hughes continues to maintain solid financial strength and liquidity. Cash and cash equivalents totaled $3 billion for the year ended December 31, 2019, excluding assets held on behalf of GE. The Company’s liquidity is further supported by a revolving credit facility of $3 billion and access to commercial paper and other uncommitted lines of credit. At both December 31, 2019 and March 31, 2020, Baker Hughes had no borrowings outstanding under the revolver, the commercial paper program, or uncommitted lines.
The Company will incorporate its latest outlook on the market and operating environment when it discusses the results for the first quarter ending March 31, 2020 on April 22, 2020.
*Baker Hughes expects that it will record a non-cash charge related to the impairment of goodwill of approximately $15 billion in the first quarter of 2020. The Company’s market capitalization declined significantly during the first quarter driven by current macroeconomic and geopolitical conditions including the collapse of oil prices driven by both surplus production and supply as well as the decrease in demand caused by the COVID-19 pandemic. In addition, the uncertainty related to oil demand continues to have a significant impact on the investment and operating plans of our primary customers. Based on these events, Baker Hughes concluded that a triggering event occurred which required the Company to perform an interim quantitative impairment test as of March 31, 2020. Based upon the results of the impairment test, the Company concluded that the carrying value of the Oilfield Services and Oilfield Equipment reporting units exceeded their estimated fair value, resulting in a goodwill impairment charge. This impairment charge will not impact the Company’s cash flow. This charge is subject to finalization.
About Baker Hughes:
Baker Hughes (NYSE: BKR) is an energy technology company that provides solutions to energy and industrial customers worldwide. Built on a century of experience and with operations in over 120 countries, our innovative technologies and services are taking energy forward – making it safer, cleaner and more efficient for people and the planet. Visit us at bakerhughes.com.
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For more information, please contact:
Investor Relations
Jud Bailey
+1 281-809-9088
investor.relations@bakerhughes.com
Media Relations
Thomas Millas
+1 910-515-7873
Thomas.millas@bakerhughes.com