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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
OR
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-38143
Baker Hughes Company
(Exact name of registrant as specified in its charter)
Delaware81-4403168
(State or other jurisdiction(I.R.S. Employer Identification No.)
of incorporation or organization)
17021 Aldine Westfield
Houston,Texas77073-5101
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713439-8600
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Class A Common Stock, par value $0.0001 per shareBKRNew York Stock Exchange
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 No
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 No
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 filerAccelerated filerNon-accelerated filerSmaller reporting company
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No
As of July 17, 2020, the registrant had outstanding 656,325,178 shares of Class A Common Stock, $0.0001 par value per share and 377,427,844 shares of Class B Common Stock, $0.0001 par value per share.



Baker Hughes Company
Table of Contents

Page No.


Baker Hughes Company 2020 Second Quarter FORM 10-Q | i



PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Baker Hughes Company
Condensed Consolidated Statements of Income (Loss)
(Unaudited)


Three Months Ended June 30,Six Months Ended June 30,
(In millions, except per share amounts)2020201920202019
Revenue:
Sales of goods$2,868  $3,346  $5,949  $6,547  
Sales of services1,868  2,648  4,211  5,061  
Total revenue 4,736  5,994  10,160  11,608  
Costs and expenses:
Cost of goods sold2,531  2,937  5,376  5,746  
Cost of services sold1,527  1,995  3,351  3,825  
Selling, general and administrative590  701  1,265  1,404  
Goodwill impairment    14,773    
Restructuring, impairment and other103  50  1,429  112  
Separation related37  40  77  74  
Total costs and expenses4,788  5,723  26,271  11,161  
Operating income (loss)(52) 271  (16,111) 447  
Other non-operating loss, net(255) (131) (230) (110) 
Interest expense, net(69) (56) (128) (115) 
Income (loss) before income taxes(376) 84  (16,469) 222  
Benefit (provision) for income taxes21  (95) 16  (162) 
Net income (loss)(355) (11) (16,453) 60  
Less: Net income (loss) attributable to noncontrolling interests(154) (2) (6,042) 37  
Net income (loss) attributable to Baker Hughes Company$(201) $(9) $(10,411) $23  
Per share amounts:
Basic and diluted earnings (loss) per Class A common stock$(0.31) $(0.02) $(15.92) $0.04  
Cash dividend per Class A common stock$0.18  $0.18  $0.36  $0.36  
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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Baker Hughes Company
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)

Three Months Ended June 30,Six Months Ended June 30,
(In millions)2020201920202019
Net income (loss)$(355) $(11) $(16,453) $60  
Less: Net income (loss) attributable to noncontrolling interests(154) (2) (6,042) 37  
Net income (loss) attributable to Baker Hughes Company(201) (9) (10,411) 23  
Other comprehensive income (loss):
Investment securities  (1) (2) 1  
Foreign currency translation adjustments52  (139) (225) 27  
Cash flow hedges  (3) (8) 1  
Benefit plans8  (13) 30  (13) 
Other comprehensive income (loss)60  (156) (205) 16  
Less: Other comprehensive income (loss) attributable to noncontrolling interests
21  (78) (76) 9  
Other comprehensive income (loss) attributable to Baker Hughes Company
39  (78) (129) 7  
Comprehensive income (loss)(295) (167) (16,658) 76  
Less: Comprehensive income (loss) attributable to noncontrolling interests
(133) (80) (6,118) 46  
Comprehensive income (loss) attributable to Baker Hughes Company
$(162) $(87) $(10,540) $30  
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Company 2020 Second Quarter FORM 10-Q | 2



Baker Hughes Company
Condensed Consolidated Statements of Financial Position
(Unaudited)
(In millions, except par value)
June 30, 2020December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents (1)
$4,132  $3,249  
Current receivables, net5,636  6,416  
Inventories, net4,616  4,608  
All other current assets1,118  949  
Total current assets15,502  15,222  
Property, plant and equipment (net of accumulated depreciation of $4,550 and $4,384)
5,710  6,240  
Goodwill5,868  20,690  
Other intangible assets, net4,416  5,381  
Contract and other deferred assets1,875  1,881  
All other assets2,978  3,001  
Deferred income taxes1,174  954  
Total assets (1)
$37,523  $53,369  
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable$3,628  $4,268  
Short-term debt and current portion of long-term debt (1)
934  321  
Progress collections and deferred income 3,507  2,870  
All other current liabilities2,498  2,555  
Total current liabilities10,567  10,014  
Long-term debt6,766  6,301  
Deferred income taxes177  51  
Liabilities for pensions and other postretirement benefits1,059  1,079  
All other liabilities1,389  1,425  
Equity:
Class A Common Stock, $0.0001 par value - 2,000 authorized, 655 and 650 issued and outstanding as of June 30, 2020 and December 31, 2019, respectively
    
Class B Common Stock, $0.0001 par value - 1,250 authorized, 377 and 377 issued and outstanding as of June 30, 2020 and December 31, 2019, respectively
    
Capital in excess of par value
23,432  23,565  
Retained loss(10,413)   
Accumulated other comprehensive loss(1,765) (1,636) 
Baker Hughes Company equity11,254  21,929  
Noncontrolling interests6,311  12,570  
Total equity17,565  34,499  
Total liabilities and equity$37,523  $53,369  
(1)Total assets include $129 million and $273 million of assets held on behalf of General Electric Company, of which $100 million and $162 million is cash and cash equivalents and $29 million and $111 million is investment securities at June 30, 2020 and December 31, 2019, respectively, and a corresponding amount of liability is reported in short-term borrowings. See "Note 16. Related Party Transactions" for further details.
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Company 2020 Second Quarter FORM 10-Q | 3



Baker Hughes Company
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
(In millions, except per share amounts)
Class A and Class B
Common Stock
Capital in
Excess of
Par Value
Retained
Loss
Accumulated
Other
Comprehensive
Loss
Non-
controlling
Interests
Total Equity
Balance at December 31, 2019$  $23,565  $  $(1,636) $12,570  $34,499  
Comprehensive income (loss):
Net loss
(10,411) (6,042) (16,453) 
Other comprehensive loss
(129) (76) (205) 
Dividends on Class A common stock ($0.36 per share)
(236) (236) 
Distributions to GE(136) (136) 
Stock-based compensation cost112  112  
Other(9) (2) (5) (16) 
Balance at June 30, 2020$  $23,432  $(10,413) $(1,765) $6,311  $17,565  


(In millions, except per share amounts)Class A and Class B
Common Stock
Capital in
Excess of
Par Value
Retained
Loss
Accumulated
Other
Comprehensive
Loss
Non-
controlling
Interests
Total Equity
Balance at March 31, 2020$  $23,486  $(10,212) $(1,804) $6,515  $17,985  
Comprehensive income (loss):
Net loss(201) (154) (355) 
Other comprehensive income39  21  60  
Dividends on Class A common stock ($0.18 per share)
(118) (118) 
Distributions to GE(68) (68) 
Stock-based compensation cost56  56  
Other8  (3) 5  
Balance at June 30, 2020$  $23,432  $(10,413) $(1,765) $6,311  $17,565  
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.





















Baker Hughes Company 2020 Second Quarter FORM 10-Q | 4



Baker Hughes Company
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
(In millions, except per share amounts)
Class A and Class B
Common Stock
Capital in
Excess of
Par Value
Retained
Earnings (Loss)
Accumulated
Other
Comprehensive
Loss
Non-
controlling
Interests
Total Equity
Balance at December 31, 2018$  $18,659  $25  $(1,219) $17,548  $35,013  
Comprehensive income:
Net income
23  37  60  
Other comprehensive income
7  9  16  
Dividends on Class A common stock ($0.36 per share)
(127) (58) (185) 
Distributions to GE(188) (188) 
Stock-based compensation cost87  87  
Other49  1  (59) (13) (22) 
Balance at June 30, 2019$  $18,668  $(9) $(1,271) $17,393  $34,781  

(In millions, except per share amounts)Class A and Class B
Common Stock
Capital in
Excess of
Par Value
Retained
Earnings (Loss)
Accumulated
Other
Comprehensive
Loss
Non-
controlling
Interests
Total Equity
Balance at March 31, 2019$  $18,646  $  $(1,134) $17,574  $35,086  
Comprehensive loss:
Net loss(9) (2) (11) 
Other comprehensive loss(78) (78) (156) 
Dividends on Class A common stock ($0.18 per share)
(93) (93) 
Distributions to GE(94) (94) 
Stock-based compensation cost46  46  
Other69  (59) (7) 3  
Balance at June 30, 2019$  $18,668  $(9) $(1,271) $17,393  $34,781  
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Company 2020 Second Quarter FORM 10-Q | 5



Baker Hughes Company
Condensed Consolidated Statements of Cash Flows
(Unaudited)

Six Months Ended June 30,
(In millions)20202019
Cash flows from operating activities:
Net income (loss)$(16,453) $60  
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation and amortization694  709  
Goodwill impairment14,773    
Intangible assets impairment725    
Property, plant and equipment impairment226    
Inventory impairment176    
Loss on sale of business228    
Changes in operating assets and liabilities:
Current receivables598  (227) 
Inventories(275) (303) 
Accounts payable(490) 46  
Progress collections and deferred income593  422  
Contract and other deferred assets(38) (29) 
Other operating items, net(49) (269) 
Net cash flows from operating activities708  409  
Cash flows from investing activities:
Expenditures for capital assets(602) (594) 
Proceeds from disposal of assets109  121  
Other investing items, net56  (90) 
Net cash flows used in investing activities(437) (563) 
Cash flows from financing activities:
Net repayments of debt and other borrowings
(149) (66) 
Proceeds from issuance of commercial paper737    
Proceeds from issuance of long-term debt500    
Dividends paid(236) (185) 
Distributions to GE(136) (188) 
Other financing items, net(21) 12  
Net cash flows from (used in) financing activities695  (427) 
Effect of currency exchange rate changes on cash and cash equivalents(83) (4) 
Increase (decrease) in cash and cash equivalents883  (585) 
Cash and cash equivalents, beginning of period3,249  3,723  
Cash and cash equivalents, end of period$4,132  $3,138  
Supplemental cash flows disclosures:
Income taxes paid, net of refunds$211  $183  
Interest paid$141  $137  
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Company 2020 Second Quarter FORM 10-Q | 6



Baker Hughes Company
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF THE BUSINESS
Baker Hughes Company (Baker Hughes, the Company, we, us, or, our) is an energy technology company with a diversified portfolio of technologies and services that span the entire energy value chain. The Company was formed as the result of a combination between Baker Hughes Incorporated (BHI) and the oil and gas business (GE O&G) of General Electric Company (GE) (the Transactions).
We are a holding company and have no material assets other than our 63.5% ownership interest in Baker Hughes Holdings LLC (BHH LLC, formerly known as Baker Hughes, a GE company, LLC), the Baker Hughes trade name, and certain intercompany and tax related balances. BHH LLC is a Securities and Exchange Commission (SEC) Registrant with separate filing requirements with the SEC and its separate financial information can be obtained from www.sec.gov.
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).
We hold a majority economic interest in BHH LLC and conduct and exercise full control over all activities of BHH LLC without the approval of any other member. Accordingly, we consolidate the financial results of BHH LLC and report a noncontrolling interest in our condensed consolidated financial statements for the economic interest held by GE. As of June 30, 2020, GE's interest in us was 36.5%.
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 to the current year presentation. In the notes to unaudited condensed consolidated financial statements, all dollar and share amounts in tabulations are in millions of dollars and shares, 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.
Separation related costs as reflected in our condensed consolidated statements of income (loss) include costs incurred in connection with the ongoing activities related to our separation from GE. See "Note 16. 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.

Baker Hughes Company 2020 Second Quarter FORM 10-Q | 7



Baker Hughes Company
Notes to Unaudited Condensed Consolidated Financial Statements
Cash and Cash Equivalents
As of June 30, 2020 and December 31, 2019, we had $835 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 $89 million and $142 million, as of June 30, 2020 and December 31, 2019, respectively, held on behalf of GE.
Cash and cash equivalents includes a total of $100 million and $162 million of cash at June 30, 2020 and December 31, 2019, respectively, held on behalf of GE, and a corresponding liability is reported in short-term borrowings. See "Note 16. 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.
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 June 30,Six Months Ended June 30,
Total Revenue2020201920202019
U.S.$983  $1,616  $2,298  $3,121  
Non-U.S.3,753  4,378  7,862  8,487  
Total$4,736  $5,994  $10,160  $11,608  

Baker Hughes Company 2020 Second Quarter FORM 10-Q | 8



Baker Hughes Company
Notes to Unaudited Condensed Consolidated Financial Statements
REMAINING PERFORMANCE OBLIGATIONS
As of June 30, 2020 and 2019, the aggregate amount of the transaction price allocated to the unsatisfied (or partially unsatisfied) performance obligations was $22.9 billion and $20.6 billion, respectively. As of June 30, 2020, we expect to recognize revenue of approximately 52%, 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.
NOTE 3. CURRENT RECEIVABLES
Current receivables are comprised of the following:
June 30, 2020December 31, 2019
Customer receivables$4,598  $5,448  
Related parties521  495  
Other858  796  
Total current receivables5,977  6,739  
Less: Allowance for credit losses(341) (323) 
Total current receivables, net$5,636  $6,416  
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, other tax receivables, customer retentions and advance payments to suppliers.
NOTE 4. INVENTORIES
Inventories, net of reserves of $421 million and $429 million as of June 30, 2020 and December 31, 2019, respectively, are comprised of the following:
June 30, 2020December 31, 2019
Finished goods$2,509  $2,546  
Work in process and raw materials2,107  2,062  
Total inventories, net$4,616  $4,608  
During the three and six months ended June 30, 2020, we recorded inventory impairments of $16 million, predominantly in our Oilfield Equipment segment, and $176 million, predominantly in our Oilfield Services segment, respectively, as a result of certain restructuring activities initiated by the Company. Charges for inventory impairments are predominantly reported in the "Cost of goods sold" caption of the condensed consolidated statements of income (loss).

Baker Hughes Company 2020 Second Quarter FORM 10-Q | 9



Baker Hughes Company
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, 2018, gross$15,676  $4,177  $2,186  $2,432  $24,471  
Accumulated impairment at December 31, 2018(2,633) (867)   (254) (3,754) 
Balance at December 31, 201813,043  3,310  2,186  2,178  20,717  
Currency exchange and others
  9  (15) (21) (27) 
Balance at December 31, 201913,043  3,319  2,171  2,157  20,690  
Impairment(11,484) (3,289)     (14,773) 
Currency exchange and others(23) (22)