Baker Hughes (BKR) 10-K risk factor changes: FY2018 vs FY2017

BHGE [removed: 2017] [added: 2018] FORM 10-K | 11

BHGE [removed: 2017] [added: 2018] FORM 10-K | 12

In addition, a cyber-related attack could adversely impact our operating results and result in other negative consequences, including damage to our reputation or competitiveness, remediation or increased protection costs, litigation or regulatory [removed: action.][added: action, fines and penalties.]

Our ability to comply with the FCPA, the U.K. Bribery Act and various other anti-bribery and anti-corruption laws depends on the success of our ongoing compliance program, including our ability to successfully manage our [removed: agents] [added: agents, distributors] and [added: other] business partners, and supervise, train and retain competent employees.

Our compliance program depends on the efforts of our [removed: employees] [added: employees, agents, distributors and other business partners] to comply with applicable law and our internal policies.

This program includes policies, procedures, processes and other internal controls designed to identify, monitor, manage and mitigate the risk of money laundering or terrorist financing posed by our products, services, customers [removed: and geographic locale.]

BHGE [removed: 2017] [added: 2018] FORM 10-K | 13

[added: These controls establish procedures and processes to detect and report suspicious] transactions, perform customer due diligence, respond to requests from law enforcement, and meet all recordkeeping and reporting requirements related to particular transactions involving currency or monetary instruments.

Changes in tax [removed: laws or] [added: laws,] tax rates, [added: tariffs,] adverse positions taken by taxing [removed: authorities] [added: authorities,] and tax audits could impact operating results.

Changes in tax [removed: laws or] [added: laws,] tax rates, [added: tariffs,] changes in interpretation of tax laws, the resolution of tax assessments or audits by various tax authorities, and the ability to fully utilize tax loss carryforwards and tax credits could impact our operating results, including additional valuation allowances for deferred tax assets.

Compliance with, and rulings and litigation in connection with, environmental [added: and climate change] regulations and the environmental [added: and climate change] impacts of our or our customers’ operations may adversely affect our business and operating results.

The EPA’s Greenhouse Gas Reporting Rule requires monitoring and reporting of GHG emissions from, among others, certain mobile and stationary GHG emission sources in the oil and natural gas industry, which in turn may include data from certain of [added: our wellsite equipment and operations.]

BHGE [removed: 2017] [added: 2018] FORM 10-K | 14

Caps [added: or fees] on carbon emissions, including in the United States, have been and may continue to be established and the cost of such caps [added: or fees] could disproportionately affect the fossil-fuel energy sector.

[removed: We are unable to predict whether the proposed changes in laws or regulations ultimately] will [removed: occur or what they ultimately will] require, and accordingly, we are unable to assess the potential financial or operational impact they may have on our business.

Other developments focused on restricting GHG emissions include the United Nations Framework Convention on Climate Change, which includes the Paris Agreement and the Kyoto Protocol; the European Union Emission Trading System; [added: Article 8 of] the [added: European Union Energy Efficiency Directive and the] United Kingdom’s [removed: CRC] [added: Carbon Reduction Commitment] Energy Efficiency and [removed: ESOS] [added: Energy Savings Opportunity (ESOS)] schemes; and, in the United States, the Regional Greenhouse Gas Initiative, the Western Climate Action Initiative, and various state programs implementing the California Global Warming Solutions Act of 2006 (known as Assembly Bill 32).

[removed: Current or future legislation, regulations and] [added: In addition, these] developments, [removed: including those related] [added: and public perception relating] to climate change, may curtail production and demand for hydrocarbons such as oil and natural gas [removed: in areas of the world where our customers operate,] by shifting demand towards [added: and investment in] relatively lower carbon energy sources such as wind, solar and other renewables.

[removed: Many state-owned oil companies and other operators] [added: We] may [removed: require] [added: enter into] integrated contracts or turnkey contracts [added: with our customers] and we may choose to provide services outside our core business.

BHGE [removed: 2017] [added: 2018] FORM 10-K | 15

Some of our customers require bids in the form of [removed: long-term,] fixed pricing contracts.

Some of our customers require bids for contracts in the form of [removed: long-term,] fixed pricing contracts that may require us to provide integrated project management services outside our normal discrete business and to act as project managers, as well as service providers, and may require us to assume additional risks associated with cost over-runs.

The estimation of reserves is a process that involves subjective judgment about likely location and volume, and estimates that prove [removed: inaccurate may result in cost over-runs, delays, and project losses for us or our customers, which may adversely impact our business.]

Our [removed: backlog is] [added: Remaining Performance Obligations (RPO) are] subject to modification, termination or reduction of orders, which could negatively impact our sales.

Our [removed: backlog] [added: RPO] is comprised of unfilled customer orders for products and product services (expected life of contract sales for product services).

Our [removed: backlog] [added: RPO] can be significantly affected by the timing of orders for large projects.

The total dollar amount of the Company’s [removed: backlog] [added: RPO] as of December 31, [removed: 2017] [added: 2018] was [removed: $21,022 million.][added: $21.0 billion.]

BHGE [removed: 2017] [added: 2018] FORM 10-K | 16

[added: If our products are unable] to [added: satisfy such requirements, or we are unable to] perform any required full-scale testing, our customers may cancel their contracts and/or seek new suppliers, and our business, results of operations, cash flows or financial position may be adversely affected.

BHGE [removed: 2017] [added: 2018] FORM 10-K | 17

Our customers also take into account the volatility of energy prices and other risk factors by requiring higher returns for individual [removed: projects if there is higher perceived risk.]

Requirements and voluntary initiatives to reduce [added: greenhouse gas] emissions, as well as increased climate change awareness, are likely to result in increased costs for the oil and gas industry to curb [added: greenhouse gas] emissions and could have an adverse impact on demand for oil and natural gas.

Productive capacity in excess of demand [removed: (“spare] [added: (spare] productive [removed: capacity”)] [added: capacity)] is also an important factor influencing energy prices and spending by oil and natural gas exploration companies.

BHGE [removed: 2017] [added: 2018] FORM 10-K | 18

Supply can also be impacted by the degree to which individual OPEC nations and other large oil and natural gas producing [removed: countries, including, but not limited to, Norway and Russia,] [added: countries] are willing and able to control production and exports of oil, to decrease or increase supply and to support their targeted oil price while meeting their market share objectives.

Risk Factors Related to the Transactions [added: and Separation from GE]

We may experience challenges relating to the ongoing integration of Baker Hughes [removed: Incorporated] and GE O&G [added: or the separation from GE] that may result in a decline in the anticipated benefits of the [removed: Transactions.][added: Transactions and the Master Agreement Framework.]

The Company has been and will continue to be required to devote management attention and resources to integrating its business practices and [removed: operations.][added: operations, as well as to the separation from GE.]

If we experience difficulties with the [added: ongoing] integration [removed: process,] [added: process or with] the [added: separation from GE, the] anticipated benefits of the Transactions [added: and the Master Agreement Framework] may not be realized fully or at all, may take longer to realize than expected, or [added: may] be offset by the decrease in business from certain [removed: customers.][added: customers or other negative impacts.]

These integration matters [added: and the impact of the separation from GE] could have an adverse effect on our business, results of operations, financial condition or other prospects on an ongoing basis.

We have incurred and will continue to incur [removed: transaction-related and restructuring] costs in connection with the Transactions and the integration of the two businesses.

and geographic locale.

We are unable to predict whether and when the proposed changes in laws or regulations ultimately will occur or what they ultimately

The potential for climate related changes may pose future risks to our operations and those of our customers.

These changes can include extreme variability in weather patterns such as increased frequency of severe weather, rising mean temperature and sea levels, and long-term changes in precipitation patterns.

Such changes have the potential to affect business continuity and operating results, particularly at facilities in coastal areas.

inaccurate may result in cost over-runs, delays, and project losses for us or our customers, which may adversely impact our business and our relationship with our customers.

The effects of Brexit may have a negative impact on our financial results and operations of the business.

In June 2016, United Kingdom (UK) voters approved the UK’s exit (Brexit) from the European Union (EU).

The political and economic uncertainty surrounding Brexit, if it occurs or in whatever form it occurs, could harm our business and financial results due to fluctuations in the value of the British pound versus the U.S. dollar, euro and other currencies.

In addition, Brexit could result in delayed deliveries, which may impact our internal supply chain and our customer projects.

projects if there is higher perceived risk.

We also have incurred and expect to continue to incur additional costs in connection with the Master Agreement Framework and the separation from GE.

The Transactions involved the combination of two businesses that previously operated as independent businesses.

Separately, on November 13, 2018, the Company, BHGE LLC and GE entered into the Master Agreement Framework designed to further solidify the commercial and technological relationships between the two companies and to facilitate BHGE’s ability to transition from operating as a controlled company.

In particular, the Master Agreement Framework contemplates long-term agreements between the Company, BHGE LLC and GE on technology, fulfillment and other key areas to provide greater clarity to customers, employees and shareholders.

Certain of the transactions contemplated by the Master Agreement Framework may be subject to regulatory approvals.

The Company has been and will continue to be required to devote management attention and resources to integrating its business practices and operations, as well as to the separation from GE.

Our entry into the Master Agreement Framework with GE, the ongoing integration of Baker Hughes and GE O&G, the separation from GE and any necessary changes to complete integration efforts based on the new business arrangements contemplated by the Master Agreement Framework may result in additional costs and difficulties.

Actual costs related to the separation and the implementation of the changes contemplated by the

Master Agreement Framework may be higher than anticipated, and we may experience additional difficulties in effecting such changes.

If we do not retain “controlled company” status in the event that GE sells additional equity in the future, we may during the phase-in period continue to rely on exemptions from certain corporate governance requirements that provide protection to stockholders of other companies.

In connection with the Master Agreement Framework, the Stockholders Agreement was amended and restated to provide that, following the Trigger Date and until GE and its affiliates own less than 20% of the voting power of our outstanding common stock, GE shall be entitled to designate one person for nomination to our board of directors.

See “Note 18.

Related Party Transactions" of the Notes to Consolidated and Combined Financial Statements in Item 8 herein”

In the event that GE sells additional equity in the future, GE may cease to control a majority of our voting power.

Accordingly, we may no longer be a “controlled company” as defined in NYSE listing rules.

Under the listing rules, a company that ceases to be a controlled company must comply with the independent board committee requirements as they relate to the nominating and corporate governance and compensation committees on the following phase-in schedule: (1) one independent committee member at the time it ceases to be a controlled company, (2) a majority of independent committee members within 90 days of the date it ceases to be a controlled company and (3) all independent committee members within one year of the date it ceases to be a controlled company.

Additionally, NYSE listing rules provide a 12-month phase-in period from the date a company ceases to be a controlled company to comply with the majority independent board requirement.

Although we believe we would be able to modify the composition of our board in a timely manner, during these phase-in periods our stockholders may not have the same protections afforded to stockholders of companies of which the majority of directors are independent.

Furthermore, a change in our board of directors and committee membership may result in a change in corporate strategy and operation philosophies, and may result in deviations from our current strategy.

The Company is a party to the tax matters agreement with GE (the Tax Matters Agreement) entered into at closing of the Transactions and amended under the Master Agreement Framework.

Under the Tax Matters Agreement, the Company could, under certain circumstances, be entitled to receive tax benefits in connection with the sale by GE of its equity interests in the Company.

However, there is no assurance that the Company will realize any such benefits.

Even if GE sells additional equity in the future and is no longer a majority stockholder, GE may still exercise control or significant influence over matters submitted to our stockholders for approval.

GE may also have influence over matters that do not require stockholder approval.

In the event that we are no longer controlled by GE, our success will remain partially dependent on GE through, among other things, their participation in our business operations and strategy as described above, our reliance on the long-term agreements and transition services agreements between the Company and GE pursuant to the Master Agreement Framework and the public perception of our affiliation with GE.

As a consequence of such expiration or termination, we would need to remove the “GE” marks from our corporate name, products and services.

The potential separation from GE has created, and may continue to create, uncertainty among our customers, suppliers, and other business partners.

In addition, the Master Agreement Framework and related binding term sheets contemplate entering into a number of definitive agreements based on terms included therein.

If we are unable to enter into definitive agreements with GE for any reason by certain specified deadlines, the business arrangements contemplated by the Master Agreement Framework may by their terms take effect in the absence of definitive agreements, which may lead to additional uncertainty and could have a material adverse effect on our business, financial condition and results of operations.

These controls establish procedures and processes to detect and report suspicious

Our tax filings for various periods will be subject to audit by the tax authorities in most jurisdictions where we conduct business.

For example, tax assessments have been received from various taxing authorities and are currently at varying stages of appeals and/or litigation regarding these matters.

These audits may result in assessment of additional taxes that are resolved with the authorities or through the courts.

We believe these assessments may occasionally be based on erroneous and even arbitrary interpretations of local tax law.

Resolution of any tax matter involves uncertainties and there are no assurances that the outcomes will be favorable.

These hazards could result in personal injury and loss of life, severe damage to or destruction of property and equipment, pollution or environmental damage and suspension of operations, as well as adversely affect our brand and reputation which is a key asset to our business.

our wellsite equipment and operations.

Many governments are providing tax advantages and other subsidies and promoting technological research to support renewable energy sources, or are mandating the use of renewable fuels or technologies.

These governmental initiatives, as well as increased societal awareness of climate change impacts, have also resulted in increased investor and consumer demand for renewable energy.

Any resulting reduction in demand for oil and natural gas could adversely affect future demand for our services and products, which may in turn adversely affect future results of operations.

Providing services on an integrated basis may also require us to assume additional risks associated with operating cost inflation, labor availability and productivity, supplier pricing and performance, and potential claims for liquidated damages.

We typically rely on third-party subcontractors and equipment providers to assist us with the completion of these types of contracts.

To the extent that we cannot engage subcontractors or acquire equipment or materials in a timely manner and on reasonable terms, our ability to complete a project in accordance with stated deadlines or at a profit may be impaired.

If the amount we are required to pay for these goods and services exceeds the amount we have estimated in bidding for fixed-price work, we could experience losses in the performance of these contracts.

These delays and additional costs may be substantial and we may be required to compensate our customers for these delays.

This may reduce the profit to be realized or result in a loss on a project or harm to our relationships with our customers.

If our products are unable to satisfy such requirements, or we are unable

Although oil prices have risen over the past year, this increase follows a decline through most of 2016,

and uncertainty remains about the trajectory of oil prices going forward.

In addition, these developments may curtail production and demand for hydrocarbons such as oil and natural gas by shifting demand towards and investment in relatively lower carbon energy sources such as wind, solar and other renewables.

Please see the section entitled "Risk Factors Related to Our Business-Compliance with, and rulings and litigation in connection with, environmental regulations and the environmental impacts of our or our customers’ operations may adversely affect our business and operating results."

We have incurred transaction-related and restructuring costs in connection with the Transactions and will continue to incur such costs in connection with the integration of the businesses of Baker Hughes Incorporated and GE O&G.

We are still assessing the magnitude of these costs and, therefore, are not able to provide estimates of these costs.

The costs related to restructuring have been included as a liability in the purchase price allocation or expensed as incurred, depending on the nature of the restructuring activity.

Moreover, many of the expenses that will be incurred, by their nature, are difficult to estimate accurately.

These expenses could, particularly in the near term, reduce the cost synergies that we achieve from the elimination of duplicative expenses and the realization of

economies of scale and cost synergies related to the integration of the businesses following the completion of the Transactions, and accordingly, any net synergies may not be achieved in the near term or at all.

These integration expenses may result in us taking significant charges against earnings following the completion of the Transactions.

Under the Stockholders Agreement, our Board will generally have four directors not designated by GE and five directors designated by GE.

Furthermore, we may

Management's Discussion and Analysis of Financial Condition and Results of Operations [removed: ("MD&A")] [added: (MD&A)] should be read in conjunction with the [removed: condensed] consolidated and combined financial statements included in Item 8.

The results of operations for the Company include the results of Baker Hughes from July 3, 2017, the date of acquisition, through December 31, [removed: 2017.][added: 2018.]

The current year [removed: results, and balances,] [added: results] may not be comparable to prior years as the [removed: current year includes] [added: prior years include] the results of Baker Hughes [added: only] from July 3, 2017.

As of December 31, [removed: 2017,] [added: 2018,] BHGE employs [removed: over 64,000] [added: approximately 66,000] employees and operates in more than 120 countries.

The increase in revenue was driven primarily by OFS as [removed: a result of] [added: 2018 included] the [removed: acquisition] [added: full year results] of Baker [removed: Hughes,] [added: Hughes compared to only six months in 2017,] and to a lesser extent, by DS partially offset by declines in TPS and OFE.

[removed: Loss] [added: In 2017, loss] before income taxes and equity in loss of affiliate was [removed: $160 million in 2017, and] [added: $335 million, which also] included restructuring and impairment charges of $412 [removed: million] [added: million,] and merger and related costs of $373 million.

[removed: In 2016, income] [added: Income] before income taxes and equity in loss of affiliate was [removed: $584 million, which also] [added: $680 million in 2018, and] included restructuring and impairment charges of [removed: $516 million,] [added: $433 million] and merger and related costs of [removed: $33] [added: $153] million.

| • | International onshore activity: we have seen a moderate increase in rig count activity in [removed: 2017] [added: 2018] and expect growth to continue into [removed: 2018,] [added: 2019,] at a [removed: moderate] [added: slightly increased] rate. We have seen signs of improvement with the increase in commodity prices, but due to continued volatility, we remain cautious as to growth expectations. |

BHGE [removed: 2017] [added: 2018] FORM 10-K | [removed: 26][added: 29]

| • | Refinery, petrochemical and industrial projects: in refining, we believe large, complex refineries should gain advantage in a more competitive, oversupplied landscape in [removed: 2018] [added: 2019] as the industry globalizes and refiners position to meet local demand and secure export potential. In petrochemicals, we continue to see healthy demand and cost-advantaged supply driving projects forward in [removed: 2018.] [added: 2019.] The industrial market continues to grow as outdated infrastructure is replaced, policy changes come into effect and power is decentralized. We continue to see growing demand across these markets in [removed: 2018.] [added: 2019.] |

Overall, we believe our portfolio is uniquely positioned to compete across the value chain, and deliver [removed: unique] [added: comprehensive] solutions for our customers.

[removed: In 2016, solar] [added: Solar] and wind net additions [removed: exceeded] [added: continued to exceed] coal and gas [removed: for the first time and it continued] throughout [removed: 2017.][added: 2018.]

In the long term, renewables' cost decline may accelerate to compete with new-built fossil [removed: capacity, however, we do not anticipate any significant impacts to our business in the foreseeable future.][added: capacity.]

Despite the near-term volatility, the long-term outlook for our industry remains [removed: strong.][added: positive.]

As such, we remain focused on delivering [removed: innovative] [added: innovative,] cost-efficient solutions that deliver step changes in operating and economic performance for our customers.

The following discussion and analysis summarizes the significant factors affecting our results of operations, financial condition and liquidity position as of and for the year ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] and should be read in conjunction with the consolidated and combined financial statements and related notes of the Company.

| | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Brent oil prices ($/Bbl) (1) | $ | [removed: 54.12] [added: 71.34] | | | $ | [removed: 43.64] [added: 54.12] | | | $ | [removed: 52.32] [added: 43.64] | |

| WTI oil prices ($/Bbl) (2) | [removed: 50.80] [added: 65.23] | | | | [removed: 43.29] [added: 50.80] | | | | [removed: 48.66] [added: 43.29] | | |

| Natural gas prices ($/mmBtu) (3) | [removed: 2.99] [added: 3.15] | | | | [removed: 2.52] [added: 2.99] | | | | [removed: 2.62] [added: 2.52] | | |

BHGE [removed: 2017] [added: 2018] FORM 10-K | [removed: 27][added: 30]

In North America, customer spending is highly driven by WTI oil prices, [removed: which,] [added: which] similar to Brent oil prices, [removed: fluctuated significantly] [added: on average increased] throughout the [removed: year, with the highest prices being recorded towards the end of the] year.

[removed: Overall,] [added: Average] WTI oil prices [added: increased to $65.23/Bbl in 2018 from $50.80/Bbl in 2017, and] ranged from a low of [removed: $42.48/Bbl] [added: $44.48/Bbl] in [removed: June 2017] [added: December 2018,] to a high of [removed: $60.46/Bbl] [added: $77.41/Bbl] in [removed: December 2017.][added: June 2018.]

In North America, natural gas prices, as measured by the Henry Hub Natural Gas Spot Price, averaged [removed: $2.99 /mmBtu] [added: $3.15/mmBtu] in [removed: 2017,] [added: 2018,] representing a [removed: 19%] [added: 6%] increase over the prior year.

Throughout the year, Henry Hub Natural Gas Spot Prices ranged from a high of [removed: $3.71 /mmBtu] [added: $6.24/mmBtu] in January [removed: 2017] [added: 2018] to a low of [removed: $2.44 /mmBtu] [added: $2.49/mmBtu] in February [removed: 2017.][added: 2018.]

According to the U.S. Department of Energy [removed: ("DOE"),] [added: (DOE),] working natural gas in storage at the end of [removed: 2017] [added: 2018] was [removed: 3,126] [added: 2,705] billion cubic feet [removed: ("Bcf"),] [added: (Bcf),] which was [removed: 5.6%,] [added: 15.6%,] or [removed: 185] [added: 421] Bcf, below the corresponding week in [removed: 2016.][added: 2017.]

Published international rig counts do not include rigs drilling in certain locations, such as Russia, the Caspian [removed: region, Iran] [added: region] and onshore China because this information is not readily available.

BHGE [removed: 2017] [added: 2018] FORM 10-K | [removed: 28][added: 31]

| | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | |

| North America | [removed: 1,082] [added: 1,223] | | | [removed: 642] [added: 1,082] | | | [removed: 1,178] [added: 642] | |

| International | [removed: 948] [added: 988] | | | [removed: 956] [added: 948] | | | [removed: 1,168] [added: 956] | |

| Worldwide | [removed: 2,030] [added: 2,211] | | | [removed: 1,598] [added: 2,030] | | | [removed: 2,346] [added: 1,598] | |

Overall the rig count was [removed: 1,598] [added: 2,211] in [removed: 2016, a decrease] [added: 2018, an increase] of [removed: 32%] [added: 9%] as compared to [removed: 2015] [added: 2017] due primarily to North American activity.

The rig count in North America [removed: decreased 46%] [added: increased 13%] in [removed: 2016] [added: 2018] compared to [removed: 2015.][added: 2017.]

Internationally, the [added: improvement in the] rig count [removed: decrease] was driven primarily by [removed: decreases] [added: increases] in [removed: Latin America, which was down 38%,] the Africa [added: region of 18%, the Asia-Pacific region and Latin America] region, [removed: which was down 20%,] [added: were also up by 9%] and [added: 3%, respectively, partially offset by] the Europe [removed: region and Asia-Pacific] region, which [removed: were] [added: was] down [removed: 18% and 15%, respectively.][added: 8%.]

BHGE [removed: 2017] [added: 2018] FORM 10-K | [removed: 29][added: 32]

The increase in orders [added: in 2018 and 2017] was driven primarily by the acquisition of Baker Hughes.

[removed: Service] [added: In 2018, service] orders were up [removed: 38%] [added: 36%] and equipment orders were up [removed: 87%.][added: 45%, compared to 2017.]

[removed: Backlog: As of December 31, 2017, backlog] [added: TPS 2017 revenue] was [removed: $21,022] [added: $6,295] million, a decrease of [removed: $675] [added: $373] million, or [removed: 3%,] [added: 6%,] from 2016.

The results of operations for the Company include the results of Baker Hughes from July 3, 2017, the date of acquisition, through the [removed: end of the] year ended December 31, [removed: 2017.][added: 2018.]

As of December 31, 2018, GE holds an approximate 50.4% controlling interest in this partnership and the Company holds an approximate 49.6% economic interest.

In June 2018, GE announced their intention to pursue an orderly separation from BHGE over time.

To that end, during the fourth quarter of 2018, certain equity transactions were completed and GE’s ownership of BHGE was reduced from approximately 62.5% to approximately 50.4%.

At the same time, we completed the Master Agreement Framework designed to further solidify the commercial and technological collaboration between us and GE and to position us for the future.

The Master Agreement Framework focuses on areas where we work most closely with GE on developing leading technology and executing for customers.

First, we defined the parameters for long-term collaboration and partnership with GE on critical rotating equipment technology.

Second, for our Digital software and technology business we will maintain the status quo as the exclusive supplier of GE Digital oil-and-gas applications.

Finally, we reached agreements on a number of other areas including our Controls business, pension, taxes, and intercompany services.

For further details on the Master Agreement Framework see "Note 18.

Related Party Disclosures" of the Notes to Consolidated and Combined Financial Statements in Item 8 herein.

In aggregate, we anticipate that the net financial impact of the agreements contemplated by the Master Agreement Framework will have a slightly negative impact on our operating margin rates of approximately 20 to 40 basis points.

In addition, we expect to incur one-time charges related to separation from GE of approximately $0.2 billion to $0.3 billion over the next three years.

We expect these charges to be primarily related to the build-out of information technology infrastructure as well as customary transaction fees.

For a discussion of certain risks associated with separation, including risks related to our business, financial condition and results of operations, see “Item 1A.

Risk Factors-Risks Factors Related to the Transactions and Separation from GE.”

In 2018, we generated revenue of $22,877 million, compared to $17,179 million in 2017.

| • | North America onshore activity: in 2018, we experienced an acceleration in rig count growth, as compared to 2017, driven by the increase in commodity prices for the first 10 months of the year. In the fourth quarter, WTI prices declined 38% driven by both increased supply and geo-political events. We expect the decline in commodity prices may have a negative impact on activity in North America in 2019. |

| • | Offshore projects: although commodity prices have been volatile, we have begun to see increasing customer activity on offshore projects and more final investment decisions being made. Subsea tree awards increased in 2018, and we expect tree awards to be roughly flat in 2019, though still at levels significantly below prior 2012 and 2013 peaks. We expect customers to continue to evaluate the timing of final investment decisions, and in light of increased commodity price volatility, there may be some project delays. |

| • | Liquefied Natural Gas (LNG) projects: we remain optimistic on the LNG market. While currently oversupplied, we believe a significant number of final investment decisions are needed to fill the projected supply-demand imbalance in the early to middle part of the next decade. In 2018, we saw positive final investment decisions for new LNG capacity. We continue to view the long-term economics of the LNG industry as positive given our outlook for supply and demand. |

However, we do not anticipate any significant impacts to our business in the foreseeable future.

2018 demonstrated the volatility of the oil and gas market.

Through the first three quarters of 2018, we experienced stability in the North American and international markets.

However, in the fourth quarter of 2018 commodity prices dropped nearly 40% resulting in increased customer uncertainty.

From an offshore standpoint, through most of 2018, we saw multiple large offshore projects reach positive final investment decisions, and the LNG market and outlook improved throughout 2018, driven by increased demand globally.

In 2018, the first large North American LNG positive final investment decision was reached.

Outside of North America, customer spending is highly driven by Brent oil prices, which increased on average throughout the year.

Average Brent oil prices increased to $71.34/Bbl in 2018 from $54.12/Bbl in 2017, and ranged from a low of $50.57/Bbl in December 2018, to a high of $86.07/Bbl in October 2018.

For the first three quarters of 2018, Brent oil prices increased sequentially.

However, in the fourth quarter, Brent oil prices declined 39% versus the end of the third quarter, as a result of increased supply from the U.S., worries of a global economic slowdown, and lower than expected production cuts.

2018 Compared to 2017

Internationally, the rig count increased 4% in 2018 as compared to the same period last year.

Within North America, the increase was primarily driven by the U.S. rig count, which was up 18% on average versus 2017, partially offset with a decrease in the Canadian rig count, which was down 8% on average.

Orders and Remaining Performance Obligations

Orders: We recognized orders of $23,904 million, $17,159 million, and $11,066 million in 2018, 2017 and 2016, respectively.

In 2017, service orders were up 39% and equipment orders were up 88%, compared to 2016.

Remaining Performance Obligations (RPO): As of December 31, 2018 and 2017, the aggregate amount of the transaction price allocated to the unsatisfied (or partially unsatisfied) performance obligations was $21.0 billion in each year, respectively.

| Oilfield Services | $ | 11,617 | | $ | 5,881 | | $ | 788 | | $ | 5,736 | | $ | 5,093 | |

| Oilfield Equipment | 2,641 | | | 2,661 | | | 3,540 | | | (20 | | ) | (879 | | ) |

| Turbomachinery & Process Solutions | 6,015 | | | 6,295 | | | 6,668 | | | (280 | | ) | (373 | | ) |

| Digital Solutions | 2,604 | | | 2,342 | | | 2,086 | | | 262 | | | 256 | | |

As a result of the Transactions, BHGE became the holding company of the combined businesses.

GE holds an approximate 62.5% controlling interest in this partnership and former Baker Hughes stockholders hold an approximate 37.5% interest through the ownership of 100% of our Class A common stock.

In 2017, we generated revenue of $17,259 million, compared to $13,269 million in 2016.

| • | North America onshore activity: in 2017, we experienced an acceleration in rig count growth, as compared to 2016. We expect the increased activity in North America to continue to grow in 2018, however, at a slower pace than seen in 2017. We remain optimistic about the outlook. |

| • | Offshore projects: although commodity prices increased in 2017, we have yet to see a change in customer spending behavior, as a result of continued oil price volatility. We expect final investment decisions to continue to remain fluid. We have seen an increase in subsea tree awards in 2017, and expect tree awards to increase in 2018, but still at levels significantly below prior 2012 & 2013 peaks, as customers continue to remain cautious with regards to major capital expenditures for the near term. |

| • | Liquefied Natural Gas (LNG) projects: we believe the market continues to be oversupplied, and will remain in its current state for the next few years. We expect some final investment decisions to move forward in |

the short term.

We do, however, view the long term economics of the LNG industry as positive given our outlook for supply and demand.

Amounts reported in millions in graphs within this report are computed based on the amounts in hundreds.

As a result, the sum of the components reported in millions may not equal the total amount reported in millions due to rounding.

Outside North America, customer spending is most heavily influenced by Brent oil prices, which fluctuated significantly throughout the year, ranging from a low of $43.98/Bbl in June 2017 to a high of $68.80/Bbl in December 2017.

Oil prices bottomed early in 2016 due to the impending production increases in Iran after economic sanctions were lifted.

During 2017, OPEC considered production cuts, and in the fourth quarter they announced extensions to agreed-upon production cuts.

As a result, in the fourth quarter of 2017, Brent oil prices shifted meaningfully higher.

In addition, demand for oil was higher than expected due to robust consumption in North America and revisions to Chinese, Russian, and European demand growth expectations.

Although oil prices have rebounded more than 100% from the previous year's twelve-year low of $26/Bbl reached in February 2016 to near $60/Bbl at the end of 2017, there has yet to be any material change in customer behavior, other than in certain U.S. basins, to suggest a near-term broader recovery in activity levels.

2016 Compared to 2015

Internationally, the rig count decreased 18% in 2016 compared to 2015.

Within North America, the decrease was primarily driven by a 44% decline in oil-directed rigs.

The natural gas-directed rig count in North America declined 50% in 2016 as natural gas well productivity improved.

Key Performance Indicators (millions)

Product services and backlog of product services

Our consolidated and combined statement of income (loss) displays sales and costs of sales in accordance with SEC regulations under which "goods" is required to include all sales of tangible products and "services" must include all other sales, including other service activities.

For the amounts shown below, we distinguish between "equipment" and "product services", where product services refer to sales under product services agreements, including sales of both goods (such as spare parts and equipment upgrades) and related services (such as monitoring, maintenance and repairs), which is an important part of its operations.

We refer to "product services" simply as "services" within the Business Environment section of Management's Discussion and Analysis.

Backlog is defined as unfilled customer orders for products and services believed to be firm.

For product services, an amount is included for the expected life of the contract.

Orders and Backlog as of December 31, 2017, 2016 and 2015 (millions)

 

Orders: In 2017, we recognized orders of $17,376 million, an increase of $6,103 million, or 54%, from 2016.

In 2016, we recognized orders of $11,273 million, a decrease of $4,112 million from 2015.

Driven by broader market conditions, we continued to see delays in final investment decisions on projects and pricing pressure.

Equipment backlog decreased from 2016 primarily driven by a lower intake of large equipment orders.

Service backlog increased from 2016 as a result of order intake.

As of December 31, 2016, backlog was $21,697 million, a decrease of $2,244 million from 2015 primarily driven by the decrease in equipment backlog of 32% as well as the strengthening of the U.S. dollar, which accounted for a decrease of $309 million.

Services backlog increased by 5% to $15,223 million.

Backlog remains strong and provides an indication of long-term revenue within the Company.

| Oilfield Services | $ | 5,851 | | $ | 799 | | $ | 1,411 | | $ | 5,052 | | $ | (612 | ) |

| Oilfield Equipment | 2,637 | | | 3,547 | | | 5,060 | | | (910 | | ) | (1,513 | | ) |

| Turbomachinery & Process Solutions | 6,463 | | | 6,837 | | | 7,985 | | | (374 | | ) | (1,148 | | ) |

[removed: The majority] [added: All] of our [added: long-term] debt is comprised of fixed rate instruments.

There were no outstanding interest rate swap agreements as of December 31, [removed: 2017.][added: 2018.]

| (In millions) | [removed: 2018 | | | |] 2019 | | | | 2020 | | | | 2021 | | | | 2022 | | | | [added: 2023 | | | |] Thereafter | | | | Total (2) | | |

| Long-term debt (1) | $ | [removed: 615] [added: —] | | | $ | — | | | $ | [removed: —] [added: 513] | | | $ | [removed: 513] [added: 1,250] | | | $ | [removed: 1,250] [added: —] | | | $ | [removed: 4,196] [added: 4,188] | | | $ | [removed: 6,574] [added: 5,951] | |

| (1) | Fair market value of our fixed rate long-term debt, excluding capital leases, was [removed: $7.0] [added: $5.6] billion at December 31, [removed: 2017.] [added: 2018.] |

BHGE [removed: 2017] [added: 2018] FORM 10-K | [removed: 45][added: 47]

We had outstanding foreign currency forward contracts with net notional amounts aggregating [removed: $3.3] [added: $2.8] billion and [removed: $0.6] [added: $3.3] billion to hedge exposure to currency fluctuations in various foreign currencies at December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively.

As of December 31, [removed: 2017,] [added: 2018,] the Company estimates that a 1% appreciation or depreciation in the U.S. dollar would result in an impact of [removed: approximately $10] [added: less than $5] million to our pre-tax earnings, however, the Company is generally able to mitigate its foreign exchange exposure, where there are liquid financial markets, through use of foreign currency derivative transactions.

Also, see "Note [removed: 14.][added: 16.]

BHGE [removed: 2017] [added: 2018] FORM 10-K | [removed: 46][added: 48]

| As of December 31, 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Weighted average interest rates | — | | % | | — | | % | | 2.49 | | % | | 2.88 | | % | | — | | % | | 3.90 | | % | | 3.57 | | % |

| As of December 31, 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Weighted average interest rates | 2.15 | | % | | — | | % | | — | | % | | 2.47 | | % | | 2.87 | | % | | 3.88 | | % | | 3.42 | | % |

Baker Hughes, a GE company (the Company, BHGE, we, us, or our), a Delaware corporation, was formed on October 28, 2016, for the purpose of facilitating the combination of Baker Hughes Incorporated, a Delaware corporation (Baker [removed: Hughes),] [added: Hughes or BHI),] and the oil and gas business (GE O&G) of General Electric Company (GE).

On July 3, 2017, we closed our business combination (the Transactions) to combine GE O&G and Baker Hughes creating a fullstream oilfield technology provider that has a unique mix of integrated equipment and service [removed: capabilities (refer to "Note 2.][added: capabilities.]

[removed: Business Acquisition"] [added: Related Party Disclosures"] of the Notes to [removed: the] Consolidated and Combined Financial Statements in Item 8 [removed: herein for further details on the Transactions).][added: herein.]

[removed: Substantially] [added: As a result of the Transactions, substantially] all of the business of GE O&G and of Baker Hughes was transferred to a subsidiary of the Company, Baker Hughes, a GE company, LLC (BHGE [removed: LLC), on July 3, 2017.][added: LLC) with GE having an economic interest of approximately 62.5% and the Company having an economic interest of approximately 37.5% of BHGE LLC.]

Although we hold a minority economic interest in BHGE LLC, we conduct and exercise full control over all [removed: activities of BHGE LLC,] [added: its activities,] without the approval of any other [removed: member, through this wholly owned subsidiary.][added: member.]

[removed: We believe that there are structural changes taking place in the] [added: The] oil and gas [added: macroeconomic environment continues to be dynamic, and we believe the] industry [added: is going through a transformation] that [removed: require] [added: requires] a change in how we work.

| • | We [removed: intend to build market leading] [added: have market-leading] product companies focused on [removed: comprehensively] reducing product and service costs, while improving equipment efficiency and reliability to [removed: significantly lower] [added: reduce total] project [removed: breakeven costs.] [added: spend.] |

BHGE [removed: 2017] [added: 2018] FORM 10-K | 1

| • | We plan to continue to develop fullstream opportunities that drive value creation through [removed: radical] improvements in total cost reduction and productivity increases for the industry. |

| • | Complete fullstream portfolio. Leading portfolio [added: of products, services and expertise] capable of serving upstream, [removed: midstream] [added: midstream/liquefied natural gas (LNG)] and downstream sectors of the oil and gas industry, matching oilfield service and equipment leaders in many areas. [removed: Our] [added: We deliver across the value chain through our] four product [removed: lines -] [added: companies:] Oilfield Services; Oilfield Equipment; Turbomachinery & Process Solutions; and Digital [removed: Solutions,] [added: Solutions] as discussed below under "Products and [removed: Services," are] [added: Services, and] each [added: are] among the top four providers in their respective segments. |

We [added: are a global business and] generate revenue and orders from a combination of equipment sales and services.

In [removed: 2017, 42%] [added: 2018, 40%] of revenue was generated from equipment sales and [removed: 58%] [added: 60%] from services, while [removed: 39%] [added: 42%] of orders were for equipment and [removed: 61%] [added: 58%] for services.

In [removed: 2016] [added: 2017] and [removed: 2015, 46%] [added: 2016, 42%] and [removed: 50%] [added: 47%] of revenue was generated from equipment sales, and [removed: 54%] [added: 58%] and [removed: 50%] [added: 53%] of revenue was from services, respectively.

We recognized orders of [removed: $17,376] [added: $23,904] million, [removed: $11,273] [added: $17,159] million, and [removed: $15,385 million, respectively,] [added: $11,066 million] in [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015.][added: 2016, respectively.]

For the amounts shown above, as well as in the orders [removed: and backlog charts] included in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 in this Form 10-K, we distinguish between “equipment” and “product services,” where product services refers to sales under product services agreements, including sales of both goods (such as spare parts and equipment upgrades) and related services (such as monitoring, maintenance and repairs), which is an important part of its operations.

BHGE [removed: 2017] [added: 2018] FORM 10-K | 2

Our [added: reportable segments, which are the same as our] operating [removed: segments] [added: segments,] are organized based on the nature of our markets and customers.

The [removed: OFS] [added: Oilfield Services (OFS)] segment provides products and services for on and offshore operations across the lifecycle of a well, ranging from drilling, evaluation, completion, [removed: production] [added: production,] and intervention.

The segment [removed: is comprised of eight] [added: includes] product lines that design and manufacture products and services to help operators find, evaluate, drill, and produce hydrocarbons.

Products and services include diamond and tri-cone drill bits, drilling services, including directional drilling technology, measurement while drilling and logging while drilling, wireline services, drilling and completions fluids, completions tools and systems, wellbore intervention tools and services, artificial lift [removed: systems] [added: systems,] and oilfield and industrial chemicals.

The OFE [removed: portfolio] [added: segment] includes deepwater drilling equipment, subsea production systems (SPS), flexible pipe systems, [added: onshore wellheads,] and related service solutions.

The OFE drilling and production systems product line offers blowout preventers, control systems, marine drilling risers, wellhead connectors, [removed: diverters] [added: diverters,] and related services.

OFE also provides advanced flexible pipe products including risers, flowlines, fluid transfer lines and jumpers, for both subsea and FPSO (floating production storage & [removed: offloading)-based] [added: offloading) based] production across a range of operating environments.

[removed: OFE’s] [added: The] key competitive areas [added: in OFE] are large-bore gas fields, deepwater oilfields and fields with long tieback distances.

BHGE [removed: 2017] [added: 2018] FORM 10-K | 3

The Turbomachinery & Process Solutions (TPS) segment 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 [removed: control] [added: control,] and other industrial applications.

The TPS segment is a leader in designing, manufacturing, maintaining and upgrading rotating equipment across the oil and gas, [removed: petro-chemical] [added: petrochemical,] and industrial sectors.

The TPS [removed: portfolio] [added: segment] includes drivers, driven equipment, flow [removed: control] [added: control,] and turnkey solutions.

Drivers are comprised of aero-derivative gas turbines, heavy-duty gas turbines, small- to medium-sized steam turbines, slow speed and integrated gas engines, hot gas and turbo [removed: expanders] [added: expanders,] and [removed: synchronous] [added: synchronous,] and induction electric motors.

TPS’ flow control includes pumps, valves, regulators, control [removed: systems] [added: systems,] and other flow and process control technologies.

As part of its turnkey solutions, TPS offers power generation modules, waste heat/energy recovery, energy storage, modularized small and large liquefaction plants, carbon [removed: capture] [added: capture,] and storage/use facilities.

TPS’ products enable customers to increase upstream oil and gas production, liquefy natural gas, compress gas for transport via pipelines, generate electricity, store gas and energy, refine oil and gas and produce [removed: petro-chemicals,] [added: petrochemicals,] while minimizing both operational and environmental risks in the most extreme service conditions.

Midstream and downstream customers include [removed: liquefied natural gas (LNG)] [added: LNG] plants, pipelines, storage facilities, [removed: refineries] [added: refineries,] and a wide range of industrial and engineering, procurement and construction (EPC) companies.

TPS’ value proposition is founded on its turbomachinery and flow control technology, a unique competence to integrate gas turbines and compressors in the most critical natural gas applications, best-in-class manufacturing and testing capabilities, reliable maintenance and service operations, and innovative real-time diagnostics and control systems, enabling condition-based maintenance and increasing overall productivity, availability, [removed: efficiency] [added: efficiency,] and reliability for oil and gas assets.

[removed: TPS differentiates itself from competitors with its expertise in technology and] project management, local presence and partnerships, as well as the deep industry know-how of its teams to provide fully integrated equipment and services solutions with state-of-art technology from design and manufacture through to operations.

The Digital Solutions (DS) segment provides operating technologies helping to improve the health, [removed: productivity] [added: productivity,] and safety of asset intensive industries and enable the Industrial Internet of Things.

DS includes the [removed: Measurement] [added: measurement] & [removed: Controls] [added: controls] business for industry-leading hardware technologies as well as [removed: the] [added: our] software businesses [removed: of GE Oil & Gas and Baker Hughes] that [removed: leverages] [added: leverage] best-of-class cloud services, including GE's Predix application development platform.

The DS [removed: portfolio] [added: segment] includes condition monitoring, inspection technologies, measurement, [removed: sensing] [added: sensing,] and pipeline solutions.

Condition monitoring technologies include the Bently Nevada® and System 1® brands, providing rack-based vibration monitoring equipment, sensors, software [removed: cyber security solutions] [added: cybersecurity solutions,] and industrial controls primarily for power generation and oil and gas operations.

The DS [removed: Measurement] [added: measurement] and [removed: Sensing] [added: sensing] product line provides instrumentation to better detect and analyze pressure, flow, gas, and moisture [removed: conditions and more.][added: conditions.]

As of December 31, 2018, GE held approximately 50.4% of the economic interest and the Company held approximately 49.6% of the economic interest in BHGE LLC.

In June 2018, GE announced their intention to pursue an orderly separation from BHGE over time.

On November 13, 2018, we entered into a Master Agreement and a series of related ancillary agreements and binding term sheets with GE (collectively, the Master Agreement Framework) designed to further solidify the commercial and technological collaborations between us and GE and to facilitate our ability to transition from operating as a controlled company.

In particular, the Master Agreement Framework contemplates long-term agreements between us and GE on technology, fulfillment and other key areas to provide greater clarity to customers, employees and shareholders.

For a discussion of certain risks associated with the separation, including risks related to our business, financial condition and results of operations, see “Item 1A.

Risk Factors-Risks Factors Related to the Transactions and Separation from GE.” For further details on the Master Agreement Framework, see "Note 18.

Secondary Offering and LLC Units Repurchase

In November 2018, we also completed an underwritten secondary public offering in which GE and its affiliates (together, the selling stockholders) sold 101.2 million shares of our Class A common stock.

We did not receive any proceeds from the shares sold by the selling stockholders in this offering.

The offering included the exchange by the selling stockholders of common units of BHGE LLC (Units) (together with the corresponding shares of our Class B common stock) for our Class A common stock, which resulted in increases in capital in excess of par value, with offsetting reductions in noncontrolling interests and other comprehensive income.

Also, in November 2018, we repurchased 65 million BHGE LLC Units (together with the corresponding shares of our Class B common stock) from GE and its affiliates for $1.5 billion, or $22.48 per unit, which is the same per share price, net of discounts and commissions, paid by the underwriters to the selling stockholders in the offering (the repurchase).

In connection with the repurchase, the corresponding shares of Class B common stock held by GE and its affiliates were canceled.

As a result of the secondary offering and the repurchase, GE's economic interest in BHGE LLC was reduced from approximately 62.5% to approximately 50.4%.

If GE's economic interest in BHGE LLC falls below 50%, they would not have a controlling interest.

Any future declines in their ownership would be accounted for by us as equity transactions reducing their noncontrolling interests.

We are the industry’s only fullstream oilfield services company with an offering that spans the entire oil and gas value chain.

In 2018, we generated revenue of $22.9 billion and conducted business in more than 120 countries.

With the breadth of our portfolio, innovative technology solutions and unique business and partnership models, we are positioned to deliver outcome-based solutions across the industry.

By integrating Health, Safety & Environment (HSE) into everything we do, we protect our people, our customers, and the environment.

We believe in doing the right thing every time, and delivering the best quality and safest products, services, processes, solutions, and technologies in the industry.

Irrespective of commodity prices, our customers are focused on reducing both capital and operating expenditures.

Our customers expect new models and solutions to deliver sustainable productivity improvements and leverage economies of scale, with a lower carbon footprint.

We have developed a comprehensive growth strategy to deliver the productivity improvements the industry needs for the next decade and beyond.

Our strategy is based on three growth pillars:

| • | We strive to create value through integrated offerings by reducing the number of interfaces as we deliver projects and services. This reduces complexity, drives speed, and increases execution efficiency, and |

Additionally, managing carbon emissions is an important strategic focus for our business.

We believe we have an important role to play in society as an industry leader and partner.

BHGE has a long legacy of pushing the boundaries of technology and operating efficiency.

In January 2019, we made a commitment to reduce CO2 equivalent (eq.) emissions 50 percent by 2030, achieving net-zero CO2 eq.

emissions by 2050.

We will also invest in our portfolio of advanced technologies to assist customers with reducing their carbon footprint.

We have already achieved a 26% reduction in its emissions since 2012 through a commitment to new technology and operational efficiencies.

We will continue to employ a broad range of emissions reduction initiatives across manufacturing, supply chain, logistics, energy sourcing and generation.

We have established a global additive manufacturing technology network with a mission to bring commercial-scale production closer to customers, reducing transportation impact and associated emissions.

| • | Technology. We have a culture built on a heritage of innovation and invention in research and development, with complementary capabilities. Technology remains a differentiator for us, and a key enabler to drive the efficiency and productivity gains our customers need. We also have a range of technologies that support our customers efforts to reduce their carbon footprint. We remain committed to investing in our products and services to maintain our leadership position across our offerings, including $700 million research & development spend in 2018. |

ORDERS AND REMAINING PERFORMANCE OBLIGATIONS

As of December 31, 2018, 2017 and 2016, the aggregate amount of transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations totaled $21.0 billion, $21.0 billion, and $21.8 billion, respectively.

Remaining performance obligations (RPO), a defined term under generally accepted accounting principles (GAAP), are unfilled customer orders for products and product services excluding any purchase order that provides the customer with the ability to cancel or terminate without incurring a substantive penalty, even if the likelihood of cancellation is remote based on historical experience.

We report our operating results through our four operating segments that consist of similar products and services within each segment as described below.

In addition, OFE offers a full range of onshore wellhead products, flow equipment, valves, actuators, as well as related services.

As a result of the Transactions, the Company became the holding company of the combined businesses of Baker Hughes and GE O&G.

GE has approximately 62.5% of economic interest in BHGE LLC and the Company has approximately 37.5% of the remaining economic interest in BHGE LLC, held indirectly through two wholly owned subsidiaries.

One of these wholly owned subsidiaries of the Company is the sole managing member of BHGE LLC.

The Company’s financial statements have been prepared on a consolidated basis, effective July 3, 2017.

For all periods prior to July 3, 2017, the Company’s financial statements were prepared on a combined basis.

The combined financial statements combine certain accounts of GE and its subsidiaries that were historically managed as part of its oil & gas business.

The GE O&G numbers in the consolidated and combined statements of income (loss) and statements of cash flows have been reclassified to conform to the current presentation.

We believe that the current presentation is a more appropriate presentation of the combined businesses.

We are the only fullstream provider of integrated oilfield products, services and digital solutions with 2017 revenue of $17.3 billion and a presence in more than 120 countries.

We strive to provide best-in-class physical and digital technology solutions for customer productivity, leveraging complementary technologies to serve customers across the full spectrum of the oil and gas value chain.

No matter the oil price, our customers are looking for new models and solutions to deliver higher industrial yield, which means improving productivity and efficiency and leveraging economies of scale, with lower carbon impact.

While we will continue to serve customers on a project basis, our fullstream portfolio, digital capabilities and leading technology and services will enable us to shift towards outcome-focused solutions, enabling customers to lower capital and operating costs, reduce non-productive time and boost resource recovery.

This is the cornerstone of our corporate strategy that is based on three pillars.

| • | We strive to create value through integrated and differentiated equipment and service modules that will impact our customers total cost of projects and operations as well as fundamentally improving industry productivity, and |

| • | Complementary technology. We have a culture built on a heritage of innovation and invention in research and development, with complementary capabilities. Technology remains a differentiator and enables us to deliver across the value chain. Given our breadth and depth, we can leverage our technology, talent and expertise across our portfolio to accelerate the pace of innovation. |

We believe we are positioned to assist our customers as they balance investment decisions between greenfield projects, brownfield projects and optimizing existing assets as a result of the current macroeconomic environment and the potentially prolonged period of lower oil prices.

We expect that aging fields will require increased maintenance and intervention to sustain production later into the well life cycle when depletion accelerates.

ORDERS AND BACKLOG

We are a global business with consolidated 2017 revenue of $17,259 million.

Due to the nature of our business, including the time required to manufacture equipment and the long-term nature of many of its service contracts, there is a backlog of unfilled customer orders for equipment sales and services, which as of December 31, 2017, 2016 and 2015 totaled $21,022 million, $21,697 million, and $23,941 million, respectively.

Backlog is defined as unfilled customer orders for products and services believed to be firm.

Following the Transactions, we revised our segment structure and began to manage and report our operating results through four operating segments - Oilfield Services, Oilfield Equipment, Turbomachinery & Processing Solutions, and Digital Solutions.

We have reflected this revised structure for all historical periods presented.

The majority of the Baker Hughes business operations are included in the Oilfield Services (OFS) segment from July 3, 2017, the date of the Transactions.

It also provides

The combination of deep domain expertise with modern data management and deep learning techniques gives customers the ability to maximize asset and operations performance.

Further information about our segments is set forth in Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations and "Note 15.

Segment Information" of the Notes to Consolidated and Combined Financial Statements in Item 8 herein.

Our sales force also uses its application engineers, field application engineers, service engineers, commercial and sales managers, and account executives to help deliver and provide customers with the best product and service solutions which BHGE can offer.

There can be no

For information regarding the total amount of research and development expense in each of the three years in the period ended December 31, 2017, see "Note 1.

Summary of Significant Accounting Policies" of the Notes to Consolidated and Combined Financial Statements in Item 8 herein.

This included a new and cutting-edge line of drill bits with hydraulic actuators that offer customers improvements in reliability, efficiency and maintainability.

Any improvements to such intellectual property made or developed by BHGE LLC will be owned by BHGE LLC and licensed back to GE pursuant to the terms of the IP Cross-License Agreement and any improvements to such intellectual property made or developed by GE will be owned by GE and licensed to BHGE LLC.

If we were to cease being a majority-owned subsidiary of GE, the licenses under the IP Cross-License Agreement are intended to survive.

The public may read and copy any materials we have filed with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549.

Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.

any amendment or waiver of these codes for our executive officers and directors.

Legal Proceedings is contained in "Note [removed: 17.][added: 19.]

The Company is reporting the following matter in compliance with SEC requirements to disclose environmental proceedings where the government is a party and that potentially involve monetary sanctions of $100,000 or greater.

In January 2018, Kern County California issued an administrative enforcement order with a proposed penalty of $130,000 for alleged violations of process safety management regulations at a manufacturing facility in Taft, California that is indirectly owned by the Company.

FOR THE FISCAL YEAR ENDED DECEMBER 31, [removed: 2017][added: 2018]

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate website, if any,] every Interactive Data File required to be submitted [removed: and posted] 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 [removed: and post] such files).

The aggregate market value of the voting and non-voting common stock held by [removed: (i)] non-affiliates of [removed: Baker Hughes Incorporated (the predecessor issuer of] the registrant [removed: pursuant to Rule 12g-3(a) under the Securities Exchange Act)] as of the last business day of the [removed: predecessor issuer’s] [added: registrant’s] most recently completed second fiscal quarter (based on the closing price on June 30, [removed: 2017 reported by the New York Stock Exchange) and (ii) non-affiliates of the registrant as of July 5, 2017, the first business day following consummation of the business combination between Baker Hughes Incorporated and \[GE Oil & Gas\] (as described in this Annual Report on Form 10-K) (based on the closing price on July 5, 2017] [added: 2018] reported by the New York Stock Exchange) [removed: were] [added: was] approximately [removed: $23,155,806,000 and $15,903,777,000 respectively.][added: $12,108,399,000.]

As of February 8, [removed: 2018,] [added: 2019,] the registrant had outstanding [removed: 422,581,873] [added: 514,871,270] shares of Class A Common Stock, $0.0001 par value per share and [removed: 706,984,255] [added: 521,543,095] shares of Class B Common Stock, $0.0001 par value per share.

Portions of Registrant's Definitive Proxy Statement for the [removed: 2018] [added: 2019] Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.

| [Item [removed: 1.](#s243D814AE8B15F648FD8B288A623BEE7)] [added: 1.](#sB419967A26E156A1B71BF5C83391462A)] | [removed: [Business](#s243D814AE8B15F648FD8B288A623BEE7)] [added: [Business](#sB419967A26E156A1B71BF5C83391462A)] | [removed: [1](#s243D814AE8B15F648FD8B288A623BEE7)] [added: [1](#sB419967A26E156A1B71BF5C83391462A)] |

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| [Item [removed: 1B.](#s1AA6970749EB5DA58304861390AC63D5)] [added: 1B.](#sDE9F228752DE595FB3860723E88C9240)] | [Unresolved Staff [removed: Comments](#s1AA6970749EB5DA58304861390AC63D5)] [added: Comments](#sDE9F228752DE595FB3860723E88C9240)] | [removed: [21](#s1AA6970749EB5DA58304861390AC63D5)] [added: [23](#sDE9F228752DE595FB3860723E88C9240)] |

| [Item [removed: 2.](#s777D7C52227152089317033D210F2D92)] [added: 2.](#s4C11A1F0705454E2A0BED1151A3D168C)] | [removed: [Properties](#s777D7C52227152089317033D210F2D92)] [added: [Properties](#s4C11A1F0705454E2A0BED1151A3D168C)] | [removed: [21](#s777D7C52227152089317033D210F2D92)] [added: [23](#s4C11A1F0705454E2A0BED1151A3D168C)] |

| [Item [removed: 3.](#sE83AAE1F97265CA5AD61DE3EAA6902D2)] [added: 3.](#s7EE71BD7B3255F9C8C3AB68AD1465735)] | [Legal [removed: Proceedings](#sE83AAE1F97265CA5AD61DE3EAA6902D2)] [added: Proceedings](#s7EE71BD7B3255F9C8C3AB68AD1465735)] | [removed: [21](#sE83AAE1F97265CA5AD61DE3EAA6902D2)] [added: [23](#s7EE71BD7B3255F9C8C3AB68AD1465735)] |

| [Item [removed: 4.](#sCEB7783E33BB599F8BD76743A4F0C240)] [added: 4.](#s6491DDC107BE5F8591C43C65339D3001)] | [Mine Safety [removed: Disclosures](#sCEB7783E33BB599F8BD76743A4F0C240)] [added: Disclosures](#s6491DDC107BE5F8591C43C65339D3001)] | [removed: [21](#sCEB7783E33BB599F8BD76743A4F0C240)] [added: [23](#s6491DDC107BE5F8591C43C65339D3001)] |

| [Item [removed: 5.](#s87BEC9952BA0527DAE5388E6EE7957B4)] [added: 5.](#s5607C1FCA76E5B35BEC726EE2B78B6C3)] | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s87BEC9952BA0527DAE5388E6EE7957B4)] [added: Securities](#s5607C1FCA76E5B35BEC726EE2B78B6C3)] | [removed: [22](#s87BEC9952BA0527DAE5388E6EE7957B4)] [added: [24](#s5607C1FCA76E5B35BEC726EE2B78B6C3)] |

| [Item [removed: 6.](#s42C87C965E695C6A9B836E6EBAED1235)] [added: 6.](#s273EB6C145E45B67B6A53A72F2E06C59)] | [Selected Financial [removed: Data](#s42C87C965E695C6A9B836E6EBAED1235)] [added: Data](#s273EB6C145E45B67B6A53A72F2E06C59)] | [removed: [25](#s42C87C965E695C6A9B836E6EBAED1235)] [added: [27](#s273EB6C145E45B67B6A53A72F2E06C59)] |

| [Item [removed: 7.](#s51429A7FB2B95348A5976DDA475D903A)] [added: 7.](#s68F1C688CB1750DCAA8FF7A7AD3A319D)] | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s51429A7FB2B95348A5976DDA475D903A)] [added: Operations](#s68F1C688CB1750DCAA8FF7A7AD3A319D)] | [removed: [26](#s51429A7FB2B95348A5976DDA475D903A)] [added: [29](#s68F1C688CB1750DCAA8FF7A7AD3A319D)] |

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| [Item [removed: 8.](#s0F1A1E28995E57ACA9417D540FA11A5E)] [added: 8.](#sD0AC2C713CEE5CCDA5FAB94FD3B4149F)] | [Financial Statements and Supplementary [removed: Data](#s0F1A1E28995E57ACA9417D540FA11A5E)] [added: Data](#sD0AC2C713CEE5CCDA5FAB94FD3B4149F)] | [removed: [47](#s0F1A1E28995E57ACA9417D540FA11A5E)] [added: [49](#sD0AC2C713CEE5CCDA5FAB94FD3B4149F)] |

| | [Management's Report on Internal Control Over Financial [removed: Reporting](#s6558729BAAA85F6F89E4B4CDA9E49F4F)] [added: Reporting](#s830636ED556751E48E8760DB5507C724)] | [removed: [47](#s6558729BAAA85F6F89E4B4CDA9E49F4F)] [added: [49](#s830636ED556751E48E8760DB5507C724)] |

| | [Report of Independent Registered Public Accounting [removed: Firm](#s7A365E9D96485F2CAF4BEEF0FCFA6DB3)] [added: Firm](#s7B8EB635B4B15B07933BD8929275726B)] | [removed: [48](#s7A365E9D96485F2CAF4BEEF0FCFA6DB3)] [added: [50](#s7B8EB635B4B15B07933BD8929275726B)] |

| | [Consolidated and Combined Statements of Income [removed: (Loss)](#s73FDCD4DA0AA5EBEBD8908BAC9FCFB34)] [added: (Loss)](#sAB996CB7DEDA52B0850E13F4623CA924)] | [removed: [51](#s73FDCD4DA0AA5EBEBD8908BAC9FCFB34)] [added: [53](#sAB996CB7DEDA52B0850E13F4623CA924)] |

| | [Consolidated and Combined Statements of Comprehensive Income [removed: (Loss)](#s2CA90496557D52AC9D208C7F9391442C)] [added: (Loss)](#sCC0505C66B795347B7F6A07CAF1B67B2)] | [removed: [52](#s2CA90496557D52AC9D208C7F9391442C)] [added: [54](#sCC0505C66B795347B7F6A07CAF1B67B2)] |

| | [Consolidated and Combined Statements of Financial [removed: Position](#sC617BE9D23875506AC54D85F75203B90)] [added: Position](#sD373D7E9C58358E097EECDDB1FA7B3A9)] | [removed: [53](#sC617BE9D23875506AC54D85F75203B90)] [added: [55](#sD373D7E9C58358E097EECDDB1FA7B3A9)] |

| | [Consolidated and Combined Statements of Changes in [removed: Equity](#sE16FFB1979FB5B689480D0F68E10A2A2)] [added: Equity](#sDF535A4C2A12540286F4036EA3B5453C)] | [removed: [54](#sE16FFB1979FB5B689480D0F68E10A2A2)] [added: [56](#sDF535A4C2A12540286F4036EA3B5453C)] |

| | [Consolidated and Combined Statements of Cash [removed: Flows](#s7E43731C8B6F5EFBBE0399D26FB95BA6)] [added: Flows](#s3627506688BA5D22A1B1647832591890)] | [removed: [55](#s7E43731C8B6F5EFBBE0399D26FB95BA6)] [added: [57](#s3627506688BA5D22A1B1647832591890)] |

| | [Notes to Consolidated and Combined Financial [removed: Statements](#sB4FE83EBD1AD5C4F8A8CDBC5636100AD)] [added: Statements](#s05B9BE32694D5F91BDCDE0DA8C3BFECC)] | [removed: [56](#sB4FE83EBD1AD5C4F8A8CDBC5636100AD)] [added: [58](#s05B9BE32694D5F91BDCDE0DA8C3BFECC)] |

| [Item [removed: 9.](#s21411355EDFA58AC97C77A109DC86C13)] [added: 9.](#sD85CECD79095543C9FC900A7DEECBB33)] | [Changes in and Disagreements [removed: with] [added: With] Accountants on Accounting and Financial [removed: Disclosure](#s21411355EDFA58AC97C77A109DC86C13)] [added: Disclosure](#sD85CECD79095543C9FC900A7DEECBB33)] | [removed: [102](#s21411355EDFA58AC97C77A109DC86C13)] [added: [106](#sD85CECD79095543C9FC900A7DEECBB33)] |

| [Item [removed: 9A.](#s666E4CADBD7859BC983E22711712E1CC)] [added: 9A.](#sB9CAF42C34905E9BA023AFF357F43A61)] | [Controls and [removed: Procedures](#s666E4CADBD7859BC983E22711712E1CC)] [added: Procedures](#sB9CAF42C34905E9BA023AFF357F43A61)] | [removed: [102](#s666E4CADBD7859BC983E22711712E1CC)] [added: [106](#sB9CAF42C34905E9BA023AFF357F43A61)] |

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| | [Part [removed: III](#sB9581E76C6725031B991DA94928E1817)] [added: III](#s1FF8706651EC598DB4A81901E36C5174)] | |

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| [Item [removed: 14.](#s7AC819090CEA57D28E4CC8D0C33DB6D6)] [added: 14.](#s91F55B646C4E5079B69571650809E631)] | [Principal Accounting Fees and [removed: Services](#s7AC819090CEA57D28E4CC8D0C33DB6D6)] [added: Services](#s91F55B646C4E5079B69571650809E631)] | [removed: [104](#s7AC819090CEA57D28E4CC8D0C33DB6D6)] [added: [108](#s91F55B646C4E5079B69571650809E631)] |

BHGE [removed: 2017] [added: 2018] FORM 10-K | i

10-K 1 fiscalyear2018form10-k.htm 10-K

| | [Part I](#s63CE147283365BFAACDE3F3C26684838) | |

| | [Part II](#sC55BF364645D54A3B8A3701D7E79A21B) | |

| | [Part IV](#s7557CAB388FA5B84B4F0EE1EDF3040CC) | |

| [Item 15.](#sB61F401123A152E0A008C2B8CAFD3F57) | [Exhibits, Financial Statement Schedules](#sB61F401123A152E0A008C2B8CAFD3F57) | [109](#sB61F401123A152E0A008C2B8CAFD3F57) |

| [Item 16.](#sc59c6af2ae874333b39c690bd53e102e) | [Form 10-K Summary](#sc59c6af2ae874333b39c690bd53e102e) | [113](#sc59c6af2ae874333b39c690bd53e102e) |

| | [Signatures](#sC4CD48FD3F445594ABF12655342F5DE3) | [114](#sC4CD48FD3F445594ABF12655342F5DE3) |

10-K 1 fiscalyear2017form10-k.htm 10-K

| | | |

| | | (Do not check if a smaller reporting company) | | |

| | [Part I](#s6EBCF37DC02B5E10AE02839D7A112775) | |

| | [Part II](#s84651DB39AF154F890FFC79451AAF84A) | |

| | [Part IV](#sB748AC4DE49D558D85A2B6C64F5B31D1) | |

| [Item 15.](#s82E18BD55A705B339F836A0DC86FCFD5) | [Exhibits](#s82E18BD55A705B339F836A0DC86FCFD5) | [105](#s82E18BD55A705B339F836A0DC86FCFD5) |

| | [Signatures](#s2E15ECA637435748BFFBDFADA81F989C) | [110](#s2E15ECA637435748BFFBDFADA81F989C) |

The following sets forth the location of our principal owned or leased facilities for our business segments as of December 31, [removed: 2017:][added: 2018:]

| Oilfield Services: | | Houston, Pasadena, and The Woodlands, Texas; Broken Arrow and Claremore, Oklahoma - all located in the United States; Leduc, Canada; Celle, Germany; Tananger, Norway; Aberdeen, Scotland; Liverpool, England; Macae, Brazil; Singapore, Singapore; Kakinada, India; Nimr, Oman; Abu Dhabi and Dubai, United Arab Emirates; [added: Dhahran, Saudi Arabia;] Luanda, Angola; Port Harcourt, Nigeria |

| Digital Solutions: | | Billerica, Massachusetts and Minden, Nevada - located in the United States; Groby, England; Shannon, Ireland; [removed: Hurth] [added: Hurth,] Germany |

[removed: We have no] [added: Information concerning] mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K [added: is included in Exhibit 95] to [removed: report for 2017.][added: this annual report.]

BHGE [removed: 2017] [added: 2018] FORM 10-K | [removed: 21][added: 23]

Our Class A common stock, $0.0001 par value per share, is traded on the New York Stock [removed: Exchange.][added: Exchange under the ticker symbol 'BHGE'.]

As of February 8, [removed: 2018,] [added: 2019,] there were approximately [removed: 6,853] [added: 6,901] stockholders of record.

All of our issued and outstanding Class B common stock, $0.0001 par value per share, is owned by [removed: GE.][added: GE and its affiliates.]

The following table contains information about our purchases of Class A common stock equity securities during the fourth quarter of [removed: 2017.][added: 2018.]

| Period | Total Number of Shares Purchased (1) | | | Average Price Paid Per Share (2) | | | | Total Number of Shares Purchased as Part of a Publicly Announced Plan or Programs (3) | | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plan or Programs [removed: (4)] [added: (3)] | | |

| (1) | Represents Class A common stock purchased from employees to satisfy the tax withholding obligations in connection with the vesting of restricted stock [removed: units and shares purchased in the open market under our publicly announced purchase program.] [added: units.] |

| (2) | Average price paid for Class A common stock purchased from employees to satisfy the tax withholding obligations in connection with the vesting of restricted stock [removed: units and shares purchased in the open market under our publicly announced purchase program, which includes commissions.] [added: units.] |

| (3) | [removed: On] [added: In] November [removed: 2,] 2017, our board of directors authorized BHGE LLC to repurchase up to $3 billion of its common units from the Company and GE. The proceeds of [removed: this] [added: any] repurchase [added: received by BHGE] are to be used [removed: by BHGE] to repurchase Class A common stock of the Company on the open [removed: market, which if fully implemented would result in the] [added: market. Any] repurchase of [removed: approximately $1.1 billion of] Class [removed: A common stock. The Class] B common stock of the Company, [removed: that] [added: which] is paired with repurchased common [removed: units, was] [added: units owned by GE and its affiliates, would be] repurchased by the Company at par value. [removed: BHGE LLC had authorization remaining to] [added: We did not] repurchase [removed: up to approximately $2.5 billion] [added: any shares] of [added: Class A common stock in the fourth quarter of 2018. However, on November 16, 2018, we repurchased and canceled 65 million shares of Class B common stock from GE and] its [added: affiliates that is paired with] common units [removed: from] [added: of] BHGE [removed: and GE at] [added: LLC for $1,461 million. As of] December 31, [removed: 2017.] [added: 2018, the stock repurchase program has been substantially completed.] |

BHGE [removed: 2017] [added: 2018] FORM 10-K | [removed: 22][added: 24]

The following graphs compare the change in our cumulative total stockholder return on our common stock (assuming reinvestment of dividends into common stock at the date of payment) with the cumulative total return on the published Standard & Poor's [removed: ("S&P")] [added: (S&P)] 500 Stock Index and the cumulative total return on the S&P 500 Oil and Gas Equipment and Services Index over the preceding five-year period.

The first graph below reflects total shareholder returns for Baker Hughes Incorporated (our predecessor issuer pursuant to Rule 12g-3(a) under the Securities Exchange Act) from December 31, [removed: 2012] [added: 2013] to July 3, 2017, the date of consummation of the Transactions.

The second graph below reflects the total shareholder returns for our common stock from July 5, 2017, the first business day following consummation of the Transactions, to December 31, [removed: 2017.][added: 2018.]

Comparison of [removed: Four] [added: Three] Years and Six Months Cumulative Total Return

[removed: Baker Hughes Incorporated;] [added: BHI;] S&P 500 Index and S&P 500 Oil and Gas Equipment and Services Index

[removed: ][added: ]

| | [removed: 2012 | | | |] 2013 | | | | 2014 | | | | 2015 | | | | 2016 | | | | [added: |] July 3, 2017 | | |

| S&P 500 Oil and Gas Equipment and Services Index | [removed: 100.00] | [removed: | | | 130.65 | | | | 120.46 | | | | 97.87] [added: 100.00] | | | | [removed: 129.12] [added: 106.02] | | | | [removed: 151.59] [added: 62.06] | | |

BHGE [removed: 2017] [added: 2018] FORM 10-K | [removed: 23][added: 25]

The following graph compares the change in cumulative total stockholder return on our common stock (assuming reinvestment of dividends into common stock at the date of payment) with the cumulative total return on the published [removed: Standard & Poor's ("S&P")] [added: S&P] 500 Stock Index and the cumulative total return on the S&P 500 Oil and Gas Equipment and Services Index over the preceding [removed: 6-months] [added: 18 month] period.

The graph reflects total shareholder returns for BHGE from July 5, 2017, the first business day following consummation of the Transactions, to December 31, [removed: 2017.][added: 2018.]

Comparison of [removed: Six] [added: Eighteen] Months Cumulative Total Return

[removed: ][added: ]

| | | July 5, 2017 | | | | December 31, 2017 | | | [added: | 2018 | | |]

| BHGE | | $ | 100.00 | | | $ | 85.84 | | [added: | $ | 59.73 | |]

| S&P 500 Index | | 100.00 | | | | 110.97 | | | [added: | 106.11 | | |]

| S&P 500 Oil and Gas Equipment and Services Index | [removed: |] 100.00 | | | | [removed: 106.02] [added: 92.20] | | | [added: | 74.91 | | | | 98.83 | | | | | 116.03 | | |]

The comparison of total return on investment (change in year-end stock price plus reinvested dividends) assumes that $100 was invested on December 31, [removed: 2012] [added: 2013] and July 5, 2017, respectively, in [removed: Baker Hughes Incorporated] [added: BHI] and BHGE common stock, the S&P 500 Index and the S&P 500 Oil and Gas Equipment and Services Index.

BHGE [removed: 2017] [added: 2018] FORM 10-K | [removed: 24][added: 26]

| October 1-31, 2018 | 15,371 | | | $ | 31.49 | | | — | | $ | 563,438,373 | |

| November 1-30, 2018 | — | | | — | | | | — | | $ | 18,690,655 | |

| December 1-31, 2018 | — | | | — | | | | — | | $ | 18,690,655 | |

| Total | 15,371 | | | $ | 31.49 | | | — | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | |

| Baker Hughes Incorporated | $ | 100.00 | | | $ | 102.54 | | | $ | 85.37 | | | $ | 121.92 | | | | $ | 108.86 | |

| S&P 500 Index | 100.00 | | | | 113.69 | | | | 115.26 | | | | 129.05 | | | | | 141.44 | | |

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | |

For information regarding quarterly high and low sales prices on the New York Stock Exchange for our Class A common stock for the period from July 5, 2017 to December 31, 2017, and information regarding dividends declared on our Class A common stock during the period from July 3, 2017 to December 31, 2017, see "Note 20.

Quarterly Data (Unaudited)" of the Notes to Consolidated and Combined Financial Statements in Item 8 herein.

| October 1-31, 2017 | 10,121 | | | $ | 36.64 | | | — | | $ | — | |

| November 1-30, 2017 | 1,761,106 | | | 30.46 | | | | 1,759,086 | | $ | 1,071,428,624 | |

| December 1-31, 2017 | 4,289,714 | | | 31.24 | | | | 4,287,649 | | $ | 937,500,428 | |

| Total | 6,060,941 | | | $ | 31.02 | | | 6,046,735 | | | | |

| | |

| --- | --- |

| (4) | During the three months ended December 31, 2017, we repurchased and canceled approximately six million shares of Class A common stock at an average price of $31.01 per share (including commissions) for a total of $187 million. We also repurchased and canceled approximately ten million shares of Class B common stock from GE that is paired with common units of BHGE LLC for $314 million. |

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Baker Hughes Incorporated | $ | 100.00 | | | $ | 136.96 | | | $ | 140.44 | | | $ | 116.93 | | | $ | 166.99 | | | $ | 149.09 | |

| S&P 500 Index | 100.00 | | | | 132.39 | | | | 150.51 | | | | 152.59 | | | | 170.84 | | | | 187.24 | | |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | Year Ended December [removed: 31,] [added: 31,(1)] | | | | | | | | | | | | [added: | | |]

| (In millions, except per share amounts) | [added: 2018 | | |] 2017 [removed: (1)] | | | 2016 | | | 2015 | | | 2014 | | |

| Cost of revenue | [removed: 14,046] [added: 18,891] | | | [removed: 10,123] [added: 14,143] | | | [added: 10,150 | | |] 12,193 | | | 14,256 | | |

| Selling, general and administrative | [added: 2,699 | | |] 2,535 | | | [removed: 1,938] [added: 1,926] | | | 2,115 | | | 2,288 | | |

| Restructuring, impairment and other (2) | [added: 433 | | |] 412 | | | 516 | | | 411 | | | 189 | | |

| Goodwill impairment (3) | — | | | — | | | [added: — | | |] 2,080 | | | — | | |

| Merger and related costs (4) | [added: 153 | | |] 373 | | | 33 | | | 27 | | | 67 | | |

| Operating income (loss) | [removed: (107] [added: 701] | | [added: | (284 | |] ) | [removed: 659] [added: 457] | | | (138 | | ) | 2,391 | | |

| Other non operating income, net | [removed: 78] [added: 202] | | | [removed: 27] [added: 80] | | | [added: 3 | | |] 100 | | | 124 | | |

| Interest expense, net | [added: (223 | | ) |] (131 | | ) | (102 | | ) | (120 | | ) | (179 | | ) |

| Income (loss) before income taxes and equity in loss of affiliate | [removed: (160] [added: 680] | | [added: | (335 | |] ) | [removed: 584] [added: 358] | | | (158 | | ) | 2,336 | | |

| Equity in loss of affiliate | [added: (139 | | ) |] (11 | | ) | — | | | — | | | — | | |

| Income tax provision | [removed: (71] [added: (258] | | ) | [removed: (250] [added: (45] | | ) | [added: (173 | | ) |] (473 | | ) | (484 | | ) |

| Net income (loss) | [removed: (242] [added: 283] | | [added: | (391 | |] ) | [removed: 334] [added: 185] | | | (631 | | ) | 1,852 | | |

| Less: Net income (loss) attributable to GE O&G pre-merger | [removed: 109] [added: —] | | | [removed: 403] [added: 42] | | | [added: 254 | | |] (606 | | ) | 1,840 | | |

| Less: Net income (loss) attributable to noncontrolling interests | [removed: (278] [added: 88] | | [added: | (330 | |] ) | (69 | | ) | (25 | | ) | 12 | | |

| Net [removed: loss] [added: income (loss)] attributable to Baker Hughes, a GE company | $ | [removed: (73] [added: 195] | [added: | $ | (103 |] ) | $ | — | | $ | — | | $ | — | |

| Per share of common stock: | | | | | | | | | | | | | [added: | | |]

| Basic [removed: and diluted loss] [added: income (loss)] per Class A common share | $ | [removed: (0.17] [added: 0.46] | [added: | $ | (0.24 |] ) | | | | | | | | | |

| Dividend: | | | | | | | | | | | | | [added: | | |]

| Cash dividend per Class A common share | [added: 0.72 | | |] 0.35 | | | | | | | | | | | |

| Special dividend per Class A common share | [added: | | |] 17.50 | | | | | | | | | | | |

| Balance Sheet Data: | | | | | | | | | | | | | [added: | | |]

| [removed: Cash and] [added: Cash, cash] equivalents [added: and restricted cash] (5) | $ | [removed: 7,023] [added: 3,723] | | $ | [added: 7,030 | | $ |] 981 | | $ | 1,432 | | $ | 1,390 | |

| Total assets | [removed: 57,050] [added: 52,439] | | | [removed: 21,721] [added: 56,500] | | | [added: 21,466 | | |] 23,133 | | | 26,496 | | |

| Long-term debt | [added: 6,285 | | |] 6,312 | | | 38 | | | 13 | | | 14 | | |

| Total equity | [removed: 39,173] [added: 35,013] | | | [removed: 14,855] [added: 38,410] | | | [added: 14,280 | | |] 14,545 | | | 16,386 | | |

| (2) | See "Note [removed: 18.] [added: 20.] Restructuring, Impairment and Other" of the Notes to Consolidated and Combined Financial Statements in Item 8 herein for further discussion. |

| [removed: (3)] [added: (4)] | [removed: Goodwill impairment recognized in our OFS operating segment.] See "Note [removed: 6. Goodwill] [added: 3. Business Acquisition] and [removed: Intangible Assets"] [added: Disposition"] of the Notes to Consolidated and Combined Financial Statements in Item 8 herein for further [removed: discussion.] [added: discussion of merger and related costs.] |

| (5) | [removed: Cash and] [added: Cash, cash] equivalents [added: and restricted cash] includes [added: $747 million and] $997 million of cash held on behalf of GE at December 31, [removed: 2017.] [added: 2018 and 2017, respectively.] |

BHGE [removed: 2017] [added: 2018] FORM 10-K | [removed: 25][added: 27]

| | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | |

| Revenue | $ | 22,877 | | $ | 17,179 | | $ | 13,082 | | $ | 16,688 | | $ | 19,191 | |

| | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | |

| Diluted income (loss) per Class A common share | 0.45 | | | (0.24 | | ) | | | | | | | | | |

| | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | |

| (1) | The current year results are not comparable to prior years as the results of Baker Hughes are included only from July 3, 2017. Additionally, we adopted FASB ASU No. 2014-09, Revenue from Contracts with Customers, and the related amendments with effect from January 1, 2016 on a full retrospective basis. Accordingly, the 2016, 2017 and 2018 fiscal year periods are presented under the new revenue standard and the 2014 and 2015 periods are not presented under the new revenue standard. |

| (3) | In performing the annual impairment test for goodwill in the third quarter of 2015 using data as of July 1 of that year, we determined that a step two test was required for a reporting unit within our OFS operating segment. As a consequence of the continued pressure on oil prices, the revised expected cash flows for this reporting unit resulted in a goodwill impairment charge of $2,080 million |

BHGE 2018 FORM 10-K | 28

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Revenue | $ | 17,259 | | $ | 13,269 | | $ | 16,688 | | $ | 19,191 | |

| (1) | The current year results are not comparable to prior years as they include the results of Baker Hughes from July 3, 2017. |

| (4) | See "Note 2. Business Acquisition" of the Notes to Consolidated and Combined Financial Statements in Item 8 herein for further discussion. |

Based on our assessment, our principal executive officer and principal financial officer concluded that our internal control over financial reporting was effective as of December 31, [removed: 2017.][added: 2018.]

BHGE [removed: 2017] [added: 2018] FORM 10-K | [removed: 47][added: 49]

We have audited the accompanying consolidated and combined statement of financial position of Baker Hughes, a GE company and subsidiaries (the [removed: “Company”)] [added: "Company")] as of December 31, [added: 2018 and] 2017, the related consolidated and combined statements of income (loss), comprehensive income (loss), changes in equity, and cash flows for [added: each of] the [removed: year] [added: years in the two-year period] ended December 31, [removed: 2017,] [added: 2018,] and the related notes (collectively, the [removed: “consolidated] [added: "consolidated] and combined financial [removed: statements”).][added: statements").]

In our opinion, the consolidated and combined financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [added: 2018 and] 2017, and the results of its operations and its cash flows for [added: each of] the [removed: year] [added: years in the two-year period] ended December 31, [removed: 2017,] [added: 2018,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) [removed: (“PCAOB”),] [added: ("PCAOB"),] the Company’s internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February [removed: 23, 2018] [added: 19, 2019] expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

We believe that our [removed: audits provide] [added: audit provides] a reasonable basis for our opinion.

BHGE [removed: 2017] [added: 2018] FORM 10-K | [removed: 48][added: 50]

We have audited the accompanying combined [removed: statement of financial position of GE Oil & Gas (a business within General Electric Company) as of December 31, 2016, and the related combined] statements of income (loss), comprehensive income (loss), changes in equity, and cash flows [removed: for each] of [removed: the years in] [added: GE Oil & Gas (the "Company", a business within General Electric Company) for] the [removed: two-year period] [added: year] ended December 31, 2016.

We conducted our [removed: audits] [added: audit] in accordance with the standards of the Public Company Accounting Oversight Board (United States) and in accordance with auditing standards generally accepted in the United States of America.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined [removed: financial position of the Company as of December 31, 2016, and the] results of [removed: its] operations and [removed: its] cash flows for [removed: each of] the [removed: years in] [added: Company for] the [removed: two-year period] [added: year] ended December 31, 2016, in conformity with U.S. generally accepted accounting principles.

March 16, 2017, except as to Note [removed: 15] [added: 17] which is as of December 4, [removed: 2017][added: 2017, and Note 1 which is as of November 13, 2018.]

BHGE [removed: 2017] [added: 2018] FORM 10-K | [removed: 49][added: 51]

We have audited Baker Hughes, a GE company and subsidiaries’ (the [removed: “Company”)] [added: "Company")] internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) [removed: (“PCAOB”),] [added: ("PCAOB"),] the consolidated and combined statement of financial position of the Company as of December 31, [added: 2018 and] 2017, the related consolidated and combined statements of income (loss), comprehensive income (loss), changes in equity, and cash flows for [added: each of] the [removed: year] [added: years in the two-year period] ended December 31, [removed: 2017,] [added: 2018,] and the related notes (collectively, the [removed: “consolidated] [added: "consolidated] and combined financial [removed: statements”),] [added: statements"),] and our report dated February [removed: 23, 2018] [added: 19, 2019,] expressed an unqualified opinion on those consolidated and combined financial statements.

BHGE [removed: 2017] [added: 2018] FORM 10-K | [removed: 50][added: 52]

| (In millions, except per share amounts) | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | | |

| Selling, general and administrative expenses | [removed: 2,535] [added: 2,699] | | | [removed: 1,938] [added: 2,535] | | | [removed: 2,115] [added: 1,926] | | |

| Restructuring, impairment and other | [removed: 412] [added: 433] | | | [removed: 516] [added: 412] | | | [removed: 411] [added: 516] | | |

| Merger and related costs | [removed: 373] [added: 153] | | | [removed: 33] [added: 373] | | | [removed: 27] [added: 33] | | |

| Total costs and expenses | [removed: 17,366] [added: 22,176] | | | [removed: 12,610] [added: 17,463] | | | [removed: 16,826] [added: 12,625] | | |

| Operating income (loss) | [removed: (107] [added: $] | [added: (1] | ) | [removed: 659 | | | (138] [added: $] | [added: 24] | [removed: )] |

| Other non operating income, net | [removed: 78] [added: 202] | | | [removed: 27] [added: 80] | | | [removed: 100] [added: 3] | | |

| Interest expense, net | [removed: (131] [added: (223] | | ) | [removed: (102] [added: (131] | | ) | [removed: (120] [added: (102] | | ) |

| Income (loss) before income taxes and equity in loss of affiliate | [removed: (160] [added: 680] | | [removed: )] | [removed: 584] [added: (335] | | [added: )] | [removed: (158] [added: 358] | | [removed: )] |

| Equity in loss of affiliate | [removed: (11] [added: (139] | | ) | [removed: —] [added: (11] | | [added: )] | — | | |

| Provision for income taxes | [removed: (71] [added: (258] | | ) | [removed: (250] [added: (45] | | ) | [removed: (473] [added: (173] | | ) |

| Less: Net income [removed: (loss)] attributable to GE O&G pre-merger | [removed: 109] [added: —] | | | [removed: 403] [added: 42] | | | [removed: (606] [added: 254] | | [removed: )] |

| Less: Net [removed: loss] [added: income (loss)] attributable to noncontrolling interests | [removed: (278] [added: 88] | | [removed: )] | [removed: (69] [added: (330] | | ) | [removed: (25] [added: (69] | | ) |

| [removed: Net] [added: Comprehensive] loss attributable to Baker Hughes, a GE company | $ | [removed: (73] [added: (35] | ) | $ | [removed: —] [added: (57] | [added: )] | $ | — | |

| Basic and diluted loss per Class A common [removed: share | $ | (0.17] [added: stock] | [removed: )] | [added: (0.07] | | [added: )] | | | |

| Cash dividend per Class A common share | $ | [removed: 0.35] [added: 0.72] | | [added: $] | [added: 0.35] | | | | |

| Special dividend per Class A common share | [removed: $] | [removed: 17.50] | | [added: $] | [added: 17.50] | | | | |

BHGE [removed: 2017] [added: 2018] FORM 10-K | [removed: 51][added: 53]

| (In millions) | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | | |

| Net [removed: loss] [added: income (loss)] attributable to Baker Hughes, a GE company | [removed: (73] [added: $] | [added: 195] | [removed: )] | [removed: —] [added: $] | [added: (103] | [added: )] | [removed: —] [added: $] | [added: —] | |

| Other comprehensive [removed: (loss) income:] [added: income (loss):] | | | | | | | | | |

| Investment securities | [removed: 4] [added: (3] | | [added: )] | [removed: —] [added: 4] | | | — | | |

| Foreign currency translation adjustments | [removed: (3] [added: (59] | | ) | [removed: (422] [added: 45] | | [removed: )] | [removed: (617] [added: —] | | [removed: )] | [added: — | | |]

| Cash flow hedges | [removed: 12] [added: (4] | | [added: )] | [removed: (8] [added: 12] | | [removed: )] | [removed: (2] [added: (8] | | ) |

February 19, 2019

Change in Accounting Principle

As discussed in Note 1 to the consolidated and combined financial statements, the Company has changed its method of accounting for revenue recognition in 2018 due to the adoption of Accounting Standards Codification 606, Revenue from Contracts with Customers.

February 19, 2019

Change in Accounting Principle

As discussed in Note 1 to the combined financial statements, the Company has changed its method of accounting for revenue recognition in 2018 due to the adoption of Accounting Standards Codification 606, Revenue from Contracts with Customers.

February 19, 2019

| Sales of goods | $ | 13,113 | | $ | 11,062 | | $ | 9,462 | |

| Sales of services | 9,764 | | | 6,117 | | | 3,620 | | |

| Total revenue | 22,877 | | | 17,179 | | | 13,082 | | |

| Cost of goods sold | 11,524 | | | 9,486 | | | 7,829 | | |

| Cost of services sold | 7,367 | | | 4,657 | | | 2,321 | | |

| Operating income (loss) | 701 | | | (284 | | ) | 457 | | |

| Net income (loss) | 283 | | | (391 | | ) | 185 | | |

| Basic income (loss) per Class A common share | $ | 0.46 | | $ | (0.24 | ) | | | |

| Diluted income (loss) per Class A common share | $ | 0.45 | | $ | (0.24 | ) | | | |

| Net income (loss) | $ | 283 | | $ | (391 | ) | $ | 185 | |

| Less: Net income attributable to GE O&G pre-merger | — | | | 42 | | | 254 | | |

| Less: Net income (loss) attributable to noncontrolling interests | 88 | | | (330 | | ) | (69 | | ) |

| Comprehensive loss | (290 | | ) | (334 | | ) | (185 | | ) |

| Current receivables, net | 5,969 | | | 6,015 | | |

| Inventories, net | 4,620 | | | 4,507 | | |

| Contract and other deferred assets | 1,894 | | | 2,044 | | |

| Deferred income taxes | 1,072 | | | 715 | | |

| Total assets (1) | $ | 52,439 | | $ | 56,500 | |

| Progress collections and deferred income | 1,765 | | | 1,775 | | |

| All other current liabilities | 2,288 | | | 2,038 | | |

| Deferred income taxes | 143 | | | 490 | | |

| All other liabilities | 960 | | | 889 | | |

| Baker Hughes, a GE company equity | 17,465 | | | 14,277 | | |

| Noncontrolling interests | 17,548 | | | 24,133 | | |

| Total equity | 35,013 | | | 38,410 | | |

See accompanying Notes to Consolidated and Combined Financial Statements

| Effect of adoption of ASU 2014-09 | | | | | | | | | | (432 | | ) | | | | | | | | | | (432 | | ) |

| Net loss | | | | | | | | | | | | | (103 | | ) | | | | (334 | | ) | (437 | | ) |

| Dividends and paired distributions to GE (1) | | | | | | | | | | | | | | | | | | | (251 | | ) | (251 | | ) |

| Balance at December 31, 2017 | — | | | — | | | 15,083 | | | — | | | (103 | | ) | (703 | | ) | 24,133 | | | 38,410 | | |

| Effect of adoption of ASU 2016-16 on taxes | | | | | | | | | | | | | 25 | | | | | | 42 | | | 67 | | |

| Net income | | | | | | | | | | | | | 195 | | | | | | 88 | | | 283 | | |

| Other comprehensive loss | | | | | | | | | | | | | | | | (230 | | ) | (343 | | ) | (573 | | ) |

| | | | | |

| --- | --- | --- | --- | --- |

February 23, 2018

| Sales of goods | $ | 10,898 | | $ | 9,488 | | $ | 12,353 | |

| Sales of services | 6,361 | | | 3,781 | | | 4,335 | | |

| Total revenue | 17,259 | | | 13,269 | | | 16,688 | | |

| Cost of goods sold | 9,402 | | | 7,816 | | | 9,271 | | |

| Cost of services sold | 4,644 | | | 2,307 | | | 2,922 | | |

| Goodwill impairment | — | | | — | | | 2,080 | | |

| Net income (loss) | (242 | | ) | 334 | | | (631 | | ) |

| Net income (loss) | $ | (242 | ) | $ | 334 | | $ | (631 | ) |

| Contract assets | 2,745 | | | 1,967 | | |

| Total assets | $ | 57,050 | | $ | 21,721 | |

| Progress collections | 1,381 | | | 1,596 | | |

| Total equity | 39,173 | | | 14,855 | | |

| Balance at December 31, 2014 | $ | — | | $ | — | | $ | — | | $ | 17,169 | | $ | — | | $ | (964 | ) | $ | 181 | | $ | 16,386 | |

| Net loss | | | | | | | | | | (606 | | ) | | | | | | | (25 | | ) | (631 | | ) |

| Changes in Parent's net investment | | | | | | | | | | (643 | | ) | | | | | | | | | | (643 | | ) |

| Changes in Parent's net investment | | | | | | | | | | 803 | | | | | | (13 | | ) | | | | 790 | | |

| Net loss | | | | | | | | | | | | | (73 | | ) | | | | (282 | | ) | (355 | | ) |

| Net activity related to noncontrolling interests | | | | | | | (61 | | ) | | | | | | | (13 | | ) | (134 | | ) | (208 | | ) |

| Balance at December 31, 2017 | $ | — | | $ | — | | $ | 15,483 | | $ | — | | $ | (73 | ) | $ | (701 | ) | $ | 24,464 | | $ | 39,173 | |

| Inventories | 392 | | | 345 | | | 442 | | |

| Progress collections | (232 | | ) | (714 | | ) | (867 | | ) |

| Deferred charges | (570 | | ) | (292 | | ) | (87 | | ) |

| Distributions to noncontrolling interest | (251 | | ) | — | | | — | | |

As a result of the Transactions, the Company became the holding company of the combined businesses of Baker Hughes and GE O&G.

GE has approximately 62.5% of economic interest in BHGE LLC and the Company has approximately 37.5% of the remaining economic interest in BHGE LLC, held indirectly through two wholly owned subsidiaries.

One of these wholly owned subsidiaries of the Company is the sole managing member of BHGE LLC.

Although we hold a minority economic interest in BHGE LLC, we conduct and exercise full control over all activities of BHGE LLC, without the approval of any other member, through this wholly owned subsidiary.

The GE O&G numbers in the consolidated and combined statements of income (loss) have been reclassed to conform to the current presentation.

We believe that the current presentation is a more appropriate presentation of the combined businesses.

Cost and Equity Method Investment

Investments in privately held companies in which we do not have the ability to exercise significant influence, most often because we hold a voting interest of 0% to 20% are accounted for using the cost method.

We record all sales of goods and services only when a firm sales agreement is in place, delivery has occurred or services have been rendered and collectability of the fixed or determinable sales price is reasonably assured.

Except for goods sold under long-term construction type contracts and service agreements, we recognize sales of goods under the provisions of SEC Staff Accounting Bulletin (SAB) 104, Revenue Recognition.

criteria, we recognize revenue when we have reliably demonstrated that all specified acceptance criteria have been met or when formal acceptance occurs, respectively.

We do not provide for anticipated losses before we record sales.

We recognize revenue on larger construction and equipment contracts using long-term construction accounting.

We estimate total long-term contract revenue net of price concessions as well as total contract costs.

None.

Change of Independent Registered Public Accounting Firm

In connection with the consummation of the Transactions, on July 3, 2017, the Audit Committee approved the engagement of KPMG LLP (KPMG) as the Company's independent registered public accountants to audit the financial statements of the Company and its consolidated subsidiaries for the period beginning July 3, 2017 and ending on December 31, 2017, such engagement to be effective on July 28, 2017.

Deloitte was the independent auditor that audited Baker Hughes' financial statements for the fiscal years ended December 31, 2016 and 2015 and the subsequent interim period from January 1, 2017 through July 3, 2017.

Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, [removed: 2017,] [added: 2018,] our disclosure controls and procedures (as defined in Rule 15d-15(e) of the Exchange Act) were effective at a reasonable assurance level.

Effective January 1, 2018, we adopted the new revenue guidance under ASC Topic 606, Revenue from Contracts with Customers, using the full retrospective method of adoption.

The adoption of this guidance required the implementation of new accounting policies and processes, including changes to our information systems, which changed the Company’s internal controls over financial reporting for revenue recognition and related disclosures for both our restated historical financial statements and current period reporting.

There has been no change in our internal controls over financial reporting during the quarter ended December 31, 2017 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

None.

BHGE 2018 FORM 10-K | 106

In a presentation at the Barclays Industrial Select Conference held February 21, 2018, GE Chief Financial Officer Jamie Miller, in a response to a question regarding BHGE and the scheme of GE’s divestment program, stated “at this point in time, we have no intent to change anything or execute prior to the expiration of any of the lockup periods.”

Subsequent to the filing of our Form 8-K with the SEC on January 24, 2018 announcing the results for the fourth quarter and full year of 2017, in the performance of our financial reporting control procedures, the Company identified an error relating to the calculation of the loss attributable to noncontrolling interest (NCI).

The NCI calculation reflects the sharing of net income, taxes, and the impact of U.S. tax reform with our noncontrolling shareholders and, in this case, impacts only the BHGE financial statements.

This resulted in an understatement of the net income attributable to BHGE of $59 million in the Form 8-K for the fourth quarter and full year of 2017.

Net income attributable to BHGE for the fourth quarter of 2017, which was previously reported as a loss of $29 million (loss of $0.07 per share) in the Form 8-K, is $30 million (income of $0.07 per share).

Net loss attributable to BHGE for the full year of 2017, which was previously reported as a loss of $132 million (loss of $0.31 per share) in the Form 8-K, is $73 million (loss of $0.17 per share).

We have reflected this change within our consolidated and combined financial statements in this Form 10-K including updated quarterly data in Note 20 to the consolidated and combined financial statements in Item 8 herein.

BHGE 2017 FORM 10-K | 102

Information concerning our directors is set forth in the sections entitled "Proposal No. 1, Election of Directors - Board Nominees for Directors," and "Corporate Governance - Committees of the Board" in our Definitive Proxy Statement for the [removed: 2018] [added: 2019] Annual Meeting of Stockholders to be filed with the SEC pursuant to the Exchange Act within 120 days of the end of our fiscal year on December 31, [removed: 2017 ("Proxy Statement"),] [added: 2018 (Proxy Statement),] which sections are incorporated herein by reference.

Information concerning security ownership of certain beneficial owners and our management is set forth in the sections entitled "Stock Ownership of Certain Beneficial Owners" and “Stock Ownership of Section 16(a) Director and Executive [removed: Officers”)] [added: Officers”] in our Proxy Statement, which sections are incorporated herein by reference.

The information in the following table is presented as of December 31, [removed: 2017] [added: 2018] with respect to shares of our Class A common stock that may be issued under our LTI Plan which has been approved by our stockholders (in millions, except per share prices).

| Stockholder-approved plans | | 2.7 | | | | | $ | 36.11 | | | | | 46.2 | | |

| Subtotal (except for weighted average exercise price) | | 2.7 | | | | | 36.11 | | | | | | 46.2 | | |

| Employee Stock Purchase Plan | | — | | | | | — | | | | | | 15.0 | | |

| Total | | 2.7 | | | | | $ | 36.11 | | | | | 61.2 | | |

BHGE 2018 FORM 10-K | 107

| Stockholder-approved plans | | 1.6 | | | | | $ | 36.61 | | | | | 53.7 | | |

| Total | | 1.6 | | | | | $ | 36.61 | | | | | 53.7 | | |

BHGE 2017 FORM 10-K | 103

BHGE 2018 FORM 10-K | 108

BHGE 2017 FORM 10-K | 104

[removed: (2)] [added: (3)] Exhibits

| [4.2](http://www.sec.gov/Archives/edgar/data/808362/000095012311079423/h84292exv4w2.htm) | [First Supplemental Indenture, dated as of August 17, 2011, between Baker Hughes Incorporated (as predecessor to Baker Hughes, a GE company, LLC) and The Bank of New York Mellon Trust Company, N.A., as trustee (including form of Notes) (incorporated by reference to Exhibit 4.2 to the Current Report of Baker [removed: Hughes, a GE company, LLC] [added: Hughes Incorporated] on Form 8-K filed on August 23, 2011).](http://www.sec.gov/Archives/edgar/data/808362/000095012311079423/h84292exv4w2.htm) |

| [4.5](http://www.sec.gov/Archives/edgar/data/808362/000095012905001852/h21636exv4w4.txt) | [Indenture, dated May 15, 1994, between Western Atlas Inc. and The Bank of New York, Trustee, providing for the issuance of securities in series (incorporated by reference to Exhibit 4.4 to the Annual Report of Baker [removed: Hughes, a GE company, LLC] [added: Hughes Incorporated] on Form 10-K for the year ended December 31, 2004).](http://www.sec.gov/Archives/edgar/data/808362/000095012905001852/h21636exv4w4.txt) |

| [removed: [10.1](http://www.sec.gov/Archives/edgar/data/1701605/000119312517220852/d343521dex101.htm)] [added: [10.5](http://www.sec.gov/Archives/edgar/data/1701605/000119312517220852/d343521dex102.htm)] | [removed: [Stockholders] [added: [Registration Rights] Agreement, dated as of July 3, 2017, between Baker Hughes, a GE company and General Electric Company (incorporated by reference to Exhibit [removed: 10.1] [added: 10.2] to the Current Report of Baker Hughes, a GE company on Form 8-K12B dated July 3, [removed: 2017).](http://www.sec.gov/Archives/edgar/data/1701605/000119312517220852/d343521dex101.htm)] [added: 2017).](http://www.sec.gov/Archives/edgar/data/1701605/000119312517220852/d343521dex102.htm)] |

| [removed: [10.2](http://www.sec.gov/Archives/edgar/data/1701605/000095010317009509/dp81159_ex1002.htm)] [added: [10.38+](http://www.sec.gov/Archives/edgar/data/808362/000095010317007635/dp79242_ex1002.htm)] | [removed: [Amendment to the Stockholders Agreement, dated as of October 2, 2017,] [added: [Offer Letter] between Baker Hughes, a GE company and [removed: General Electric Company] [added: Lorenzo Simonelli, dated as of August 1, 2017] (filed as Exhibit 10.2 to the Current Report of Baker Hughes, a GE company on Form 8-K filed on [removed: October 2, 2017).](http://www.sec.gov/Archives/edgar/data/1701605/000095010317009509/dp81159_ex1002.htm)] [added: August 4, 2017).](http://www.sec.gov/Archives/edgar/data/808362/000095010317007635/dp79242_ex1002.htm)] |

| [removed: [10.3](http://www.sec.gov/Archives/edgar/data/1701605/000119312517220852/d343521dex102.htm)] [added: [10.6](http://www.sec.gov/Archives/edgar/data/1701605/000119312517220852/d343521dex103.htm)] | [removed: [Registration Rights] [added: [Exchange] Agreement, dated as of July 3, 2017, [removed: between] [added: among General Electric Company, GE Oil & Gas US Holdings I, Inc., GE Oil & Gas US Holdings IV, Inc., GE Holdings (US), Inc.,] Baker Hughes, a GE company and [removed: General Electric Company] [added: Baker Hughes, a GE company, LLC] (incorporated by reference to Exhibit [removed: 10.2] [added: 10.3] to the Current Report of Baker Hughes, a GE company on Form 8-K12B dated July 3, [removed: 2017).](http://www.sec.gov/Archives/edgar/data/1701605/000119312517220852/d343521dex102.htm)] [added: 2017).](http://www.sec.gov/Archives/edgar/data/1701605/000119312517220852/d343521dex103.htm)] |

| [removed: [10.4](http://www.sec.gov/Archives/edgar/data/1701605/000119312517220852/d343521dex103.htm)] [added: [10.8](http://www.sec.gov/Archives/edgar/data/1701605/000119312517220852/d343521dex105.htm)] | [removed: [Exchange] [added: [Tax Matters] Agreement, dated as of July 3, 2017, among General Electric Company, [removed: GE Oil & Gas US Holdings I, Inc., GE Oil & Gas US Holdings IV, Inc., GE Holdings (US), Inc.,] Baker Hughes, a GE [removed: company] [added: company, EHHC Newco, LLC] and Baker Hughes, a GE company, LLC (incorporated by reference to Exhibit [removed: 10.3] [added: 10.5] to the Current Report of Baker Hughes, a GE company on Form 8-K12B dated July 3, [removed: 2017).](http://www.sec.gov/Archives/edgar/data/1701605/000119312517220852/d343521dex103.htm)] [added: 2017).](http://www.sec.gov/Archives/edgar/data/1701605/000119312517220852/d343521dex105.htm)] |