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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_________to__________
Commission File Number 1-38143
Baker Hughes Company
(Exact name of registrant as specified in its charter)
Delaware81-4403168
(State or other jurisdiction(I.R.S. Employer Identification No.)
of incorporation or organization)
17021 Aldine Westfield
Houston,Texas77073-5101
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (713439-8600
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Class A Common Stock, par value $0.0001 per shareBKRThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer" "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No
As of April 13, 2023, the registrant had outstanding 1,012,362,186 shares of Class A Common Stock, $0.0001 par value per share.



Baker Hughes Company
Table of Contents
Page No.

Baker Hughes Company 2023 First Quarter Form 10-Q | i



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

Three Months Ended March 31,
(In millions, except per share amounts)20232022
Revenue:
Sales of goods$3,484 $2,809 
Sales of services2,232 2,026 
Total revenue 5,716 4,835 
Costs and expenses:
Cost of goods sold2,982 2,366 
Cost of services sold1,585 1,499 
Selling, general and administrative655 621 
Restructuring, impairment and other56 70 
Total costs and expenses5,278 4,556 
Operating income438 279 
Other non-operating income (loss), net386 (28)
Interest expense, net(64)(64)
Income before income taxes760 187 
Provision for income taxes(179)(107)
Net income581 80 
Less: Net income attributable to noncontrolling interests5 8 
Net income attributable to Baker Hughes Company$576 $72 
Per share amounts:
Basic & diluted income per Class A common stock$0.57 $0.08 
Cash dividend per Class A common stock$0.19 $0.18 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
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Baker Hughes Company
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
Three Months Ended March 31,
(In millions)20232022
Net income$581 $80 
Less: Net income attributable to noncontrolling interests5 8 
Net income attributable to Baker Hughes Company576 72 
Other comprehensive income (loss):
Foreign currency translation adjustments(61)17 
Cash flow hedges(1)1 
Benefit plans7 8 
Other comprehensive income (loss)(55)26 
Comprehensive income526 106 
Less: Comprehensive income attributable to noncontrolling interests5 8 
Comprehensive income attributable to Baker Hughes Company$521 $98 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
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Baker Hughes Company
Condensed Consolidated Statements of Financial Position
(Unaudited)
(In millions, except par value)
March 31,
2023
December 31,
2022
ASSETS
Current assets:
Cash and cash equivalents$2,415 $2,488 
Current receivables, net6,291 5,958 
Inventories, net4,786 4,587 
All other current assets1,894 1,559 
Total current assets15,386 14,592 
Property, plant and equipment (net of accumulated depreciation of $5,258 and $5,121)
4,513 4,538 
Goodwill5,916 5,930 
Other intangible assets, net4,123 4,180 
Contract and other deferred assets1,603 1,503 
All other assets2,838 2,781 
Deferred income taxes663 657 
Total assets$35,042 $34,181 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable$4,263 $4,298 
Short-term and current portion of long-term debt684 677 
Progress collections and deferred income 4,434 3,822 
All other current liabilities2,237 2,278 
Total current liabilities11,618 11,075 
Long-term debt5,975 5,980 
Deferred income taxes246 229 
Liabilities for pensions and other postretirement benefits932 960 
All other liabilities1,422 1,412 
Equity:
Class A Common Stock, $0.0001 par value - 2,000 authorized, 1,012 and 1,006 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively
  
Class B Common Stock, $0.0001 par value - 1,250 authorized, nil issued and outstanding as of March 31, 2023 and December 31, 2022, respectively
  
Capital in excess of par value
27,925 28,126 
Retained loss(10,185)(10,761)
Accumulated other comprehensive loss(3,026)(2,971)
Baker Hughes Company equity14,714 14,394 
Noncontrolling interests135 131 
Total equity14,849 14,525 
Total liabilities and equity$35,042 $34,181 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
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Baker Hughes Company
Condensed Consolidated Statements of Changes in Equity
(Unaudited)

(In millions, except per share amounts)
Class A and Class B
Common Stock
Capital in
Excess of
Par Value
Retained
Loss
Accumulated
Other
Comprehensive
Loss
Non-
controlling
Interests
Total Equity
Balance at December 31, 2022$ $28,126 $(10,761)$(2,971)$131 $14,525 
Comprehensive income:
Net income 576 5 581 
Other comprehensive loss (55) (55)
Dividends on Class A common stock ($0.19 per share)
(192)  (192)
Stock-based compensation cost49 49 
Other(58)  (1)(59)
Balance at March 31, 2023$ $27,925 $(10,185)$(3,026)$135 $14,849 
(In millions, except per share amounts)
Class A and Class B
Common Stock
Capital in
Excess of
Par Value
Retained
Loss
Accumulated
Other
Comprehensive
Loss
Non-
controlling
Interests
Total Equity
Balance at December 31, 2021$ $27,375 $(10,160)$(2,385)$1,916 $16,746 
Comprehensive income:
Net income72 8 80 
Other comprehensive income26 26 
Dividends on Class A common stock ($0.18 per share)
(172)(172)
Distributions to GE(13)(13)
Effect of exchange of Class B common stock and associated BHH LLC Units for Class A common stock1,357 (200)(1,157) 
Repurchase and cancellation of Class A common stock(232)(4)(236)
Stock-based compensation cost52 52 
Other(29)(7)(36)
Balance at March 31, 2022$ $28,351 $(10,088)$(2,559)$743 $16,447 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
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Baker Hughes Company
Condensed Consolidated Statements of Cash Flows
(Unaudited)

Three Months Ended March 31,
(In millions)20232022
Cash flows from operating activities:
Net income$581 $80 
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization269 277 
Gain on equity securities(392)(11)
Provision for deferred income taxes58 23 
Stock-based compensation cost49 52 
Inventory impairment18  
Changes in operating assets and liabilities:
Current receivables(332)(204)
Inventories(265)(205)
Accounts payable43 74 
Progress collections and deferred income639 280 
Contract and other deferred assets(148)(38)
Other operating items, net(59)(256)
Net cash flows from operating activities461 72 
Cash flows from investing activities:
Expenditures for capital assets(310)(268)
Proceeds from disposal of assets46 91 
Other investing items, net35 (89)
Net cash flows used in investing activities(229)(266)
Cash flows from financing activities:
Net repayments of debt(5)(11)
Dividends paid(192)(172)
Distributions to GE (13)
Repurchase of Class A common stock (236)
Other financing items, net(53)(37)
Net cash flows used in financing activities(250)(469)
Effect of currency exchange rate changes on cash and cash equivalents(55)1 
Decrease in cash and cash equivalents(73)(662)
Cash and cash equivalents, beginning of period2,488 3,853 
Cash and cash equivalents, end of period$2,415 $3,191 
Supplemental cash flows disclosures:
Income taxes paid, net of refunds$163 $130 
Interest paid$50 $48 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
Baker Hughes Company 2023 First Quarter Form 10-Q | 5



Baker Hughes Company
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF THE BUSINESS
Baker Hughes Company ("Baker Hughes", "the Company", "we", "us", or "our") is an energy technology company with a diversified portfolio of technologies and services that span the energy and industrial value chain. We are a holding company and have no material assets other than our wholly owned operating company, Baker Hughes Holdings LLC ("BHH LLC"). BHH LLC is a Securities and Exchange Commission ("SEC") Registrant with separate filing requirements with the SEC and its separate financial information can be obtained from www.sec.gov.
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S." and such principles, "U.S. GAAP") and pursuant to the rules and regulations of the SEC for interim financial information. Accordingly, certain information and disclosures normally included in our annual financial statements have been condensed or omitted. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 (the "2022 Annual Report").
In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary by management to fairly state our results of operations, financial position and cash flows of the Company and its subsidiaries for the periods presented and are not indicative of the results that may be expected for a full year. The Company's financial statements have been prepared on a consolidated basis. Under this basis of presentation, our financial statements consolidate all of our subsidiaries (entities in which we have a controlling financial interest, most often because we hold a majority voting interest). All intercompany accounts and transactions have been eliminated.
In the Company's financial statements and notes, certain prior year amounts have been reclassified to conform to the current year presentation. In the notes to the unaudited condensed consolidated financial statements, all dollar and share amounts in tabulations are in millions of dollars and shares, respectively, unless otherwise indicated. Certain columns and rows in our financial statements and notes thereto may not add due to the use of rounded numbers.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Please refer to "Note 1. Basis of Presentation and Summary of Significant Accounting Policies," to our consolidated financial statements from our 2022 Annual Report for the discussion of our significant accounting policies.
Cash and Cash Equivalents
As of March 31, 2023 and December 31, 2022, we had $549 million and $605 million, respectively, of cash held in bank accounts that cannot be readily released, transferred or otherwise converted into a currency that is regularly transacted internationally, due to lack of market liquidity, capital controls or similar monetary or exchange limitations limiting the flow of capital out of the jurisdiction. These funds are available to fund operations and growth in these jurisdictions, and we do not currently anticipate a need to transfer these funds to the U.S.
Supply Chain Finance Programs
On January 1, 2023, we adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. ASU 2022-04, Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, which enhances the transparency of supplier finance programs and requires certain disclosures for a buyer in a supplier finance program.
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Baker Hughes Company
Notes to Unaudited Condensed Consolidated Financial Statements
Under the supply chain finance (“SCF”) programs, administered by a third party, our suppliers are given the opportunity to sell receivables from us to participating financial institutions at their sole discretion at a rate that leverages our credit rating and thus might be more beneficial to our suppliers. Our responsibility is limited to making payment on the terms originally negotiated with our supplier, regardless of whether the supplier sells its receivable to a financial institution. The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the program.
As of March 31, 2023 and December 31, 2022, $316 million and $275 million of SCF program liabilities are recorded in “Accounts payable” in our condensed consolidated statements of financial position, respectively, and reflected as cash flow from operating activities in our condensed consolidated statements of cash flows when settled.
NEW ACCOUNTING STANDARDS TO BE ADOPTED
New accounting pronouncements that have been issued but not yet effective are currently being evaluated and at this time are not expected to have a material impact on our financial position or results of operations.
NOTE 2. CURRENT RECEIVABLES
Current receivables are comprised of the following:
March 31, 2023December 31, 2022
Customer receivables$5,264 $5,083 
Other1,366 1,216 
Total current receivables6,630 6,299 
Less: Allowance for credit losses(339)(341)
Total current receivables, net$6,291 $5,958 
Customer receivables are recorded at the invoiced amount. The "Other" category consists primarily of advance payments to suppliers, indirect taxes, and customer retentions.
NOTE 3. INVENTORIES
Inventories, net of reserves of $383 million and $396 million as of March 31, 2023 and December 31, 2022, respectively, are comprised of the following:
March 31, 2023December 31, 2022
Finished goods$2,461 $2,419 
Work in process and raw materials2,325 2,168 
Total inventories, net$4,786 $4,587 
During the three months ended March 31, 2023, we recorded inventory impairments of $18 million, predominately in our Oilfield Services & Equipment ("OFSE") segment. Charges for inventory impairments are reported in the "Cost of goods sold" caption in the condensed consolidated statements of income (loss). See "Note 17. Restructuring, Impairment, and Other" for further information.
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Baker Hughes Company
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 4. GOODWILL AND OTHER INTANGIBLE ASSETS
GOODWILL
The changes in the carrying value of goodwill are detailed below by segment:
Oilfield Services & EquipmentIndustrial & Energy TechnologyTotal
Balance at December 31, 2021, gross$19,825 $4,661 $24,486 
Accumulated impairment at December 31, 2021(18,273)(254)(18,527)
Balance at December 31, 20211,552 4,407 5,959 
Disposition(161) (161)
Acquisitions41 417 458 
Currency exchange, impairment and other (96)(96)
Total1,432 4,728 6,160 
Classified as held for sale (1)
 (230)(230)
Balance at December 31, 20221,432 4,498 5,930 
Currency exchange and other16 (30)(14)
Balance at March 31, 2023$1,448 $4,468 $5,916 
(1)The reduction in Industrial & Energy Technology ("IET") goodwill relates to transferring our IET Nexus Controls business to held for sale. See "Note 18. Business Held for Sale" for further information.
We perform our annual goodwill impairment test for each of our reporting units as of July 1 of each fiscal year, in conjunction with our annual strategic planning process. We also test goodwill for impairment whenever events or circumstances occur which, in our judgment, could more likely than not reduce the fair value of one or more reporting units below its carrying value. Potential impairment indicators include, but are not limited to, (i) the results of our most recent annual or interim impairment testing, in particular the magnitude of the excess of fair value over carrying value observed, (ii) downward revisions to internal forecasts, and the magnitude thereof, if any, and (iii) declines in our market capitalization below our book value, and the magnitude and duration of those declines, if any.
During the first quarter of 2023, we completed a review to assess whether indicators of impairment existed. As a result of this assessment, we concluded that no indicators existed that would lead to a determination that it is more likely than not that the fair value of each reporting unit is less than its carrying value. There can be no assurances that future sustained declines in macroeconomic or business conditions affecting our industry will not occur, which could result in goodwill impairment charges in future periods.
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Baker Hughes Company
Notes to Unaudited Condensed Consolidated Financial Statements
OTHER INTANGIBLE ASSETS
Intangible assets are comprised of the following:
March 31, 2023December 31, 2022
Gross
Carrying
Amount
Accumulated
Amortization
NetGross
Carrying
Amount
Accumulated
Amortization
Net
Customer relationships$1,898 $(746)$1,152 $1,917 $(729)$1,189 
Technology1,204 (816)388 1,212 (803)409 
Trade names and trademarks287 (178)109 287 (175)112 
Capitalized software1,325 (1,053)272 1,308 (1,040)268 
Finite-lived intangible assets4,714 (2,793)1,921 4,725 (2,747)1,978 
Indefinite-lived intangible assets2,202 — 2,202 2,202 — 2,202 
Total intangible assets$6,916 $(2,793)$4,123 $6,927 $(2,747)$4,180 
Intangible assets are generally amortized on a straight-line basis with estimated useful lives ranging from 1 to 35 years. Amortization expense for the three months ended March 31, 2023 and 2022 was $63 million and $55 million, respectively.
Estimated amortization expense for the remainder of 2023 and each of the subsequent five fiscal years is expected to be as follows:
YearEstimated Amortization Expense
Remainder of 2023$184 
2024227 
2025186 
2026144 
2027120 
202897 
NOTE 5. CONTRACT AND OTHER DEFERRED ASSETS
Contract assets reflect revenue earned in excess of billings on our long-term contracts to construct technically complex equipment, provide long-term product service and maintenance or extended warranty arrangements and other deferred contract related costs. Our long-term product service agreements are provided by our IET segment. Our long-term equipment contracts are provided by both our IET and OFSE segments. Contract assets are comprised of the following:
March 31, 2023December 31, 2022
Long-term product service agreements $396 $392 
Long-term equipment contracts and certain other service agreements1,034 955 
Contract assets (total revenue in excess of billings)1,430 1,347 
Deferred inventory costs142 125 
Other costs to fulfill or obtain a contract (1)
31 31 
Contract and other deferred assets$1,603 $1,503 
(1)     Other costs to fulfill or obtain a contract consist primarily of non-recurring engineering costs incurred and expected to be recovered.
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Baker Hughes Company
Notes to Unaudited Condensed Consolidated Financial Statements
Revenue recognized during the three months ended March 31, 2023 and 2022 from performance obligations satisfied (or partially satisfied) in previous periods related to our long-term service agreements was $1 million and $(4) million, respectively. This includes revenue recognized from revisions to cost or billing estimates that may affect a contract’s total estimated profitability resulting in an adjustment of earnings.
NOTE 6. PROGRESS COLLECTIONS AND DEFERRED INCOME
Contract liabilities include progress collections, which reflects billings in excess of revenue, and deferred income on our long-term contracts to construct technically complex equipment, long-term product maintenance or extended warranty arrangements. Contract liabilities are comprised of the following:
March 31, 2023December 31, 2022
Progress collections$4,282 $3,713 
Deferred income152 109 
Progress collections and deferred income (contract liabilities)$4,434 $3,822 
Revenue recognized during the three months ended March 31, 2023 and 2022 that was included in the contract liabilities at the beginning of the period was $962 million and $739 million, respectively.
NOTE 7. LEASES
Our leasing activities primarily consist of operating leases for administrative offices, manufacturing facilities, research centers, service centers, sales offices and certain equipment.
Three Months Ended March 31,
Operating Lease Expense20232022
Long-term fixed lease$69 $63 
Long-term variable lease15 9 
Short-term lease128 109 
Total operating lease expense$212 $181 
Cash flows used in operating activities for operating leases approximates our expense for the three months ended March 31, 2023 and 2022.
The weighted-average remaining lease term as of March 31, 2023 and December 31, 2022 was approximately seven years for our operating leases. The weighted-average discount rate used to determine the operating lease liability as of March 31, 2023 and December 31, 2022 was 3.2% and 3.1%, respectively.
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Baker Hughes Company
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 8. DEBT
The carrying value of our short-term and long-term debt are comprised of the following:
March 31, 2023December 31, 2022
Short-term and current portion of long-term debt
1.231% Senior Notes due December 2023
$649 $649 
Other debt35 29 
Total short-term and current portion of long-term debt684 677 
   
Long-term debt  
8.55% Debentures due June 2024
113 114 
2.061% Senior Notes due December 2026
597 597 
3.337% Senior Notes due December 2027
1,287 1,277 
6.875% Notes due January 2029
272 273 
3.138% Senior Notes due November 2029
523 523 
4.486% Senior Notes due May 2030
497 497 
5.125% Senior Notes due September 2040
1,285 1,286 
4.080% Senior Notes due December 2047
1,338 1,338 
Other long-term debt63 75 
Total long-term debt5,975 5,980 
Total debt$6,659 $6,658 
The estimated fair value of total debt at March 31, 2023 and December 31, 2022 was $6,040 million and $5,863 million, respectively. For a majority of our debt the fair value was determined using quoted period-end market prices. Where market prices are not available, we estimate fair values based on valuation methodologies using current market interest rate data adjusted for our non-performance risk.
BHH LLC has a $3 billion committed unsecured revolving credit facility ("the Credit Agreement") with commercial banks maturing in December 2024. In addition, we have a commercial paper program with authorization up to $3 billion under which we may issue from time to time commercial paper with maturities of no more than 397 days. The Credit Agreement contains certain customary representations and warranties, certain customary affirmative covenants and certain customary negative covenants. Upon the occurrence of certain events of default, BHH LLC's obligations under the Credit Agreement may be accelerated. Such events of default include payment defaults to lenders under the Credit Agreement and other customary defaults. No such events of default have occurred. At March 31, 2023 and December 31, 2022, there were no borrowings under either the Credit Agreement or the commercial paper program.
Baker Hughes Co-Obligor, Inc. is a co-obligor, jointly and severally with BHH LLC on our long-term debt securities. This co-obligor is a 100%-owned finance subsidiary of BHH LLC that was incorporated for the sole purpose of serving as a corporate co-obligor of long-term debt securities and has no assets or operations other than those related to its sole purpose. As of March 31, 2023, Baker Hughes Co-Obligor, Inc. is a co-obligor of our long-term debt securities totaling $6,560 million.
Certain Senior Notes contain covenants that restrict BHH LLC's ability to take certain actions, including, but not limited to, the creation of certain liens securing debt, the entry into certain sale-leaseback transactions, and engaging in certain merger, consolidation and asset sale transactions in excess of specified limits. At March 31, 2023, we were in compliance with all debt covenants.
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Baker Hughes Company
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 9. INCOME TAXES
For the three months ended March 31, 2023, the provision for income taxes was $179 million. The difference between the U.S. statutory tax rate of 21% and the effective tax rate is primarily related to income in jurisdictions with tax rates higher than in the U.S., which is partially offset by income subject to U.S. tax at an effective rate less than 21% due to valuation allowances.
For the three months ended March 31, 2022, the provision for income taxes was $107 million. The difference between the U.S. statutory tax rate of 21% and the effective tax rate is primarily related to losses with no tax benefit due to valuation allowances and income in jurisdictions with tax rates higher than the U.S., partially offset by tax benefits related to uncertain tax positions.
NOTE 10. EQUITY
COMMON STOCK
We are authorized to issue 2 billion shares of Class A common stock, 1.25 billion shares of Class B common stock and 50 million shares of preferred stock each of which have a par value of $0.0001 per share. The number of shares outstanding of Class A and Class B common stock as of March 31, 2023 is 1,012 million and nil, respectively. We have not issued any preferred stock. Each share of Class A and Class B common stock and the associated membership interest in BHH LLC form a paired interest. While each share of Class B common stock has equal voting rights to a share of Class A common stock, it has no economic rights, meaning holders of Class B common stock have no right to dividends or any assets in the event of liquidation of the Company. As of March 31, 2023, there are no shares of Class B common stock issued and outstanding.
We have a share repurchase program which we expect to fund from cash generated from operations, and we expect to make share repurchases from time to time subject to the Company's capital plan, market conditions, and other factors, including regulatory restrictions. The repurchase program may be suspended or discontinued at any time and does not have a specified expiration date. There were no shares of Class A common stock or common units of BHH LLC ("LLC Units") repurchased during the three months ended March 31, 2023. During the three months ended March 31, 2022, the Company and BHH LLC repurchased and canceled 8.1 million shares of Class A common stock and LLC Units, respectively, each for $236 million, representing an average price per share of $28.96. As of March 31, 2023, the Company and BHH LLC had authorization remaining to repurchase up to approximately $2.8 billion of its Class A common stock and LLC Units, respectively.
The following table presents the changes in the number of shares outstanding (in thousands):
Class A
Common Stock
Class B
Common Stock
2023202220232022
Balance at January 11,005,960 909,142  116,548 
Issue of shares upon vesting of restricted stock units (1)
5,342 5,906   
Issue of shares on exercises of stock options (1)
88 1,233   
Issue of shares for employee stock purchase plan491 591   
Exchange of Class B common stock for Class A common stock (2)
 75,957  (75,957)
Repurchase and cancellation of Class A common stock (8,142)  
Balance at March 311,011,881 984,688  40,591 
(1)Share amounts reflected above are net of shares withheld to satisfy the employee's tax withholding obligation.
(2)When shares of Class B common stock, together with associated LLC Units, are exchanged for shares of Class A common stock, such shares of Class B common stock are canceled.
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Baker Hughes Company
Notes to Unaudited Condensed Consolidated Financial Statements
ACCUMULATED OTHER COMPREHENSIVE LOSS (AOCL)
The following tables present the changes in accumulated other comprehensive loss, net of tax:
Foreign Currency Translation AdjustmentsCash Flow HedgesBenefit PlansAccumulated Other Comprehensive Loss
Balance at December 31, 2022$(2,666)$(9)$(296)$(2,971)
Other comprehensive income before reclassifications(61)(1)3 (59)
Amounts reclassified from accumulated other comprehensive loss 1 4 5 
Other comprehensive income (loss)(61)(1)7 (55)
Balance at March 31, 2023$(2,727)$(10)$(289)$(3,026)
Foreign Currency Translation AdjustmentsCash Flow HedgesBenefit PlansAccumulated Other Comprehensive Loss
Balance at December 31, 2021$(2,125)$(10)$(250)$(2,385)
Other comprehensive income (loss) before reclassifications(17) 5 (12)
Amounts reclassified from accumulated other comprehensive loss34 1 5 40 
Deferred taxes  (2)(2)
Other comprehensive income (loss)17 1 8 26 
Less: Reallocation of AOCL based on change in ownership of LLC Units177 2 21 200 
Balance at March 31, 2022$(2,285)$(11)$(263)$(2,559)
The amounts reclassified from accumulated other comprehensive loss during the three months ended March 31, 2023 and 2022 represent (i) gains (losses) reclassified on cash flow hedges when the hedged transaction occurs, (ii) the amortization of net actuarial gain (loss), prior service credit, settlements, and curtailments which are included in the computation of net periodic pension cost, and (iii) the release of foreign currency translation adjustments (see "Note 17. Restructuring, Impairment, and Other" for additional details).
NOTE 11. EARNINGS PER SHARE
Basic and diluted net income per share of Class A common stock is presented below:
Three Months Ended March 31,
(In millions, except per share amounts)20232022
Net income$581 $80 
Less: Net income attributable to noncontrolling interests5 8 
Net income attributable to Baker Hughes Company$576 $72 
Weighted average shares outstanding:
Class A basic1,010 938 
Class A diluted1,018 948 
Net income per share attributable to common stockholders:
Class A basic and diluted$0.57 $0.08 
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Baker Hughes Company
Notes to Unaudited Condensed Consolidated Financial Statements
Shares of our Class B common stock do not share in earnings or losses of the Company and are not considered in the calculation of basic or diluted earnings per share ("EPS") above. As such, separate presentation of basic and diluted EPS of Class B under the two class method has not been presented. The basic weighted average shares outstanding for our Class B common stock for the three months ended March 31, 2023 and 2022 were nil and 88 million, respectively. The basic weighted average shares outstanding for both our Class A and Class B common stock combined for the three months ended March 31, 2023 and 2022 were 1,010 million and 1,026 million, respectively.
For the three months ended March 31, 2023 and 2022, Class A diluted shares include the dilutive impact of equity awards except for approximately 2 million options that were excluded because the exercise price exceeded the average market price of our Class A common stock and is therefore antidilutive.
NOTE 12. FINANCIAL INSTRUMENTS
RECURRING FAIR VALUE MEASUREMENTS
Our assets and liabilities measured at fair value on a recurring basis consists of derivative instruments and investment securities.
March 31, 2023December 31, 2022
Level 1Level 2Level 3Net BalanceLevel 1Level 2Level 3Net Balance
Assets   
Derivatives
$ $27 $ $27 $ $18 $ $18 
Investment securities1,105   1,105 748   748 
Total assets1,105 27  1,132 748 18  766 
Liabilities
Derivatives (88) (88) (86) (86)
Total liabilities$ $(88)$ $(88)$ $(86)$ $(86)

March 31, 2023December 31, 2022
Amortized CostGross Unrealized GainsGross Unrealized LossesEstimated Fair ValueAmortized CostGross Unrealized GainsGross Unrealized LossesEstimated Fair Value
Investment securities (1)
      
Non-U.S. debt securities (2)
$11 $ $ $11 $ $ $ $ 
Equity securities545 549  1,094 557 191  748 
Total$556 $549 $ $1,105 $557 $191 $ $748 
(1)Gains recorded to earnings related to these securities were $392 million and $12 million for the three months ended March 31, 2023 and 2022, respectively.
(2)As of March 31, 2023, our non-U.S. debt securities are classified as available for sale securities and mature within one year.
As of March 31, 2023 and December 31, 2022, our equity securities with readily determinable fair values are comprised primarily of our investment in C3.ai, Inc. ("C3 AI") of $232 million and $97 million, respectively, and ADNOC Drilling of $860 million and $649 million, respectively. We measured our investments to fair value based on quoted prices in active markets.
As of March 31, 2023, our investment in C3 AI consists of 6,920,476 shares of Class A common stock ("C3 AI Shares"). During the three months ended March 31, 2023, we sold approximately 1.7 million of C3 AI Shares and
Baker Hughes Company 2023 First Quarter Form 10-Q | 14



Baker Hughes Company
Notes to Unaudited Condensed Consolidated Financial Statements
received proceeds of $46 million. For the three months ended March 31, 2023 and 2022, we recorded a gain of $181 million and a loss of $74 million, respectively, from the net change in fair value of our investment in C3 AI, which is reported in “Other non-operating income (loss), net” in our condensed consolidated statements of income (loss).
As of March 31, 2023, our investment in ADNOC Drilling consists of 800,000,000 shares. For the three months ended March 31, 2023 and 2022, we recorded a gain of $211 million and $85 million, respectively, from the net change in fair value of our investment in ADNOC Drilling, which is reported in “Other non-operating income (loss), net” in our condensed consolidated statements of income (loss).
As of March 31, 2023 and December 31, 2022, $1,105 million and $748 million, respectively, of total investment securities are recorded in "All other current assets."
FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS
Our financial instruments include cash and cash equivalents, current receivables, certain investments, accounts payable, short and long-term debt, and derivative financial instruments. Except for long-term debt, the estimated fair value of these financial instruments as of March 31, 2023 and December 31, 2022 approximates their carrying value as reflected in our condensed consolidated financial statements. For further information on the fair value of our debt, see "Note 8. Debt."
DERIVATIVES AND HEDGING
We use derivatives to manage our risks and do not use derivatives for speculation. The table below summarizes the fair value of all derivatives, including hedging instruments and embedded derivatives.
 March 31, 2023December 31, 2022
AssetsLiabilitiesAssetsLiabilities
Derivatives accounted for as hedges
Currency exchange contracts$ $ $1 $ 
Interest rate swap contracts (61) (69)
Derivatives not accounted for as hedges
Currency exchange contracts and other27 (27)17 (17)
Total derivatives$27 $(88)$18 $(86)
Derivatives are classified in the condensed consolidated statements of financial position depending on their respective maturity date. As of March 31, 2023 and December 31, 2022, $26 million and $17 million of derivative assets are recorded in "All other current assets" and $1 million and $1 million are recorded in "All other assets" in the condensed consolidated statements of financial position, respectively. As of March 31, 2023 and December 31, 2022, $29 million and $17 million of derivative liabilities are recorded in "All other current liabilities" and $59 million and $69 million are recorded in "All other liabilities" of the condensed consolidated statements of financial position, respectively.
Baker Hughes Company 2023 First Quarter Form 10-Q | 15



Baker Hughes Company
Notes to Unaudited Condensed Consolidated Financial Statements
FORMS OF HEDGING
Cash Flow Hedges
We use cash flow hedging primarily to reduce or eliminate the effects of foreign exchange rate changes on purchase and sale contracts. Accordingly, the vast majority of our derivative activity in this category consists of currency exchange contracts. In addition, we are exposed to interest rate risk fluctuations in connection with long-term debt that we issue from time to time to fund our operations. During the three months ended March 31, 2023, the Company executed interest rate swap contracts designated as cash flow hedges with a notional amount of $375 million in order to hedge the Company's expected exposure in connection with refinancing activities we may undertake in 2023. Changes in the fair value of cash flow hedges are recorded in a separate component of equity (referred to as "Accumulated Other Comprehensive Income" or "AOCI") and are recorded in earnings in the period in which the hedged transaction occurs. See "Note 10. Equity" for further information on activity in AOCI for cash flow hedges. As of March 31, 2023 and December 31, 2022, the maximum term of derivative instruments that hedge forecasted transactions was approximately one year.
Fair Value Hedges
All of our long-term debt is comprised of fixed rate instruments. We are subject to interest rate risk on our debt portfolio and may use interest rate swaps to manage the economic effect of fixed rate obligations associated with certain debt. Under these arrangements, we agree to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount.
As of March 31, 2023 and December 31, 2022, we had interest rate swaps with a notional amount of $500 million that converted a portion of our $1,350 million aggregate principal amount of 3.337% fixed rate Senior Notes due 2027 into a floating rate instrument with an interest rate based on a LIBOR index as a hedge of its exposure to changes in fair value that are attributable to interest rate risk. We concluded that the interest rate swap met the criteria necessary to qualify for the short-cut method of hedge accounting, and as such, an assumption is made that the change in the fair value of the hedged debt, due to changes in the benchmark rate, exactly offsets the change in the fair value of the interest rate swaps. Therefore, the derivative is considered to be effective at achieving offsetting changes in the fair value of the hedged liability, and no ineffectiveness is recognized. The mark-to-market of this fair value hedge is recorded as gains or losses in interest expense and is equally offset by the gain or loss of the underlying debt instrument, which also is recorded in interest expense.
Economic Hedges
These derivatives are not designated as hedges from an accounting standpoint (and therefore we do not apply hedge accounting to the relationship) but otherwise serve the same economic purpose as other hedging arrangements. Economic hedges are marked to fair value through earnings each period.
The following table summarizes the gains (losses) from derivatives not designated as hedges in the condensed consolidated statements of income (loss):
Derivatives not designated as hedging instrumentsCondensed consolidated statements of income (loss) captionThree Months Ended March 31,
20232022
Currency exchange contracts (1)
Cost of goods sold$3 $(2)
Currency exchange contractsCost of services sold2 3 
Commodity derivativesCost of goods sold1 9 
Total (2)
$6 $10 
(1)Excludes losses of nil and gains of $1 million on embedded derivatives for the three months ended March 31, 2023 and 2022, respectively, as embedded derivatives are not considered to be hedging instruments in our economic hedges.
(2)The effect on earnings of derivatives not designated as hedges is substantially offset by the change in fair value of the economically hedged items in the current and future periods.
Baker Hughes Company 2023 First Quarter Form 10-Q | 16



Baker Hughes Company
Notes to Unaudited Condensed Consolidated Financial Statements
NOTIONAL AMOUNT OF DERIVATIVES
The notional amount of a derivative is the number of units of the underlying. A substantial majority of the outstanding notional amount of $4.3 billion and $3.8 billion at March 31, 2023 and December 31, 2022, respectively, is related to hedges of anticipated sales and purchases in foreign currency, commodity purchases, changes in interest rates, and contractual terms in contracts that are considered embedded derivatives and for intercompany borrowings in foreign currencies. We generally disclose derivative notional amounts on a gross basis to indicate the total counterparty risk. Where we have gross purchase and sale derivative contracts for a particular currency, we look to execute these contracts with the same counterparty to reduce our exposure. The notional amount of these derivative instruments do not generally represent cash amounts exchanged by us and the counterparties, but rather the nominal amount upon which changes in the value of the derivatives are measured.
COUNTERPARTY CREDIT RISK
Fair values of our derivatives can change significantly from period to period based on, among other factors, market movements and changes in our positions. We manage counterparty credit risk (the risk that counterparties will default and not make payments to us according to the terms of our agreements) on an individual counterparty basis.
NOTE 13. REVENUE RELATED TO CONTRACTS WITH CUSTOMERS
DISAGGREGATED REVENUE
We disaggregate our OFSE and IET segment revenue from contracts with customers by product lines. See "Note 14. Segment Information" for further details.
Three Months Ended March 31,
Total Revenue20232022
Well Construction$1,061 $883 
Completions, Intervention & Measurements909 781 
Production Solutions938 825 
Subsea & Surface Pressure Systems670 528 
Oilfield Services & Equipment3,577 3,017 
Gas Technology - Equipment827 543 
Gas Technology - Services591 581 
Total Gas Technology1,418 1,124 
Condition Monitoring140 126 
Inspection254 212 
Pumps, Valves & Gears201 221 
PSI & Controls125 136 
Total Industrial Technology721 694 
Industrial & Energy Technology2,138 1,818 
Total$5,716 $4,835 
Baker Hughes Company 2023 First Quarter Form 10-Q | 17



Baker Hughes Company
Notes to Unaudited Condensed Consolidated Financial Statements
In addition, management views OFSE segment revenue from contracts with customers by geographic region:
Three Months Ended March 31,
Oilfield Services & Equipment Geographic Revenue20232022
North America$992 $823 
Latin America661 440 
Europe/CIS/Sub-Saharan Africa581 660 
Middle East/Asia1,345 1,094 
Oilfield Services & Equipment$3,577 $3,017 
REMAINING PERFORMANCE OBLIGATIONS
As of March 31, 2023, the aggregate amount of the transaction price allocated to the unsatisfied (or partially unsatisfied) performance obligations was $29.6 billion. As of March 31, 2023, we expect to recognize revenue of approximately 60%, 72% and 90% of the total remaining performance obligations within 2, 5, and 15 years, respectively, and the remaining thereafter. Contract modifications could affect both the timing to complete as well as the amount to be received as we fulfill the related remaining performance obligations.
NOTE 14. SEGMENT INFORMATION
The Company's segments are determined as those operations whose results are reviewed regularly by the chief operating decision maker ("CODM"), who is our Chief Executive Officer, in deciding how to allocate resources and assess performance. We report our operating results through two operating segments, Oilfield Services & Equipment and Industrial & Energy Technology. Each segment is organized and managed based upon the nature of our markets and customers and consists of similar products and services. These products and services operate across upstream oil and gas and broader energy and industrial markets.
OILFIELD SERVICES & EQUIPMENT ("OFSE")
Oilfield Services & Equipment provides products and services for onshore and offshore oilfield operations across the lifecycle of a well, ranging from exploration, appraisal, and development, to production, rejuvenation, and decommissioning. OFSE is organized into four product lines: Well Construction, which encompasses drilling services, drill bits, and drilling & completions fluids; Completions, Intervention, and Measurements, which encompasses well completions, pressure pumping, and wireline services; Production Solutions, which spans artificial lift systems and oilfield & industrial chemicals; and Subsea & Surface Pressure Systems, which encompasses subsea projects services and drilling systems, surface pressure control, and flexible pipe systems. Beyond its traditional oilfield concentration, OFSE is expanding its capabilities and technology portfolio to meet the challenges of a net-zero future. These efforts include expanding into new energy areas such as geothermal and CCUS, strengthening its digital architecture and addressing key energy market themes.
INDUSTRIAL & ENERGY TECHNOLOGY ("IET")
Industrial & Energy Technology provides technology solutions and services for mechanical-drive, compression and power-generation applications across the energy industry, including oil and gas, liquefied natural gas ("LNG") operations, downstream refining and petrochemical markets, as well as lower carbon solutions to broader energy and industrial sectors. IET also provides equipment, software, and services that serve a wide range of industries including petrochemical and refining, nuclear, aviation, automotive, mining, cement, metals, pulp and paper, and food and beverage. IET is organized into six product lines - Gas Technology Equipment and Gas Technology Services, collectively referred to as Gas Technology, and Condition Monitoring, Inspection, Pumps Valves & Gears, and PSI & Controls, collectively referred to as Industrial Technology.
Revenue and operating income for each segment are determined based on the internal performance measures used by the CODM to assess the performance of each segment in a financial period. The performance of our
Baker Hughes Company 2023 First Quarter Form 10-Q | 18



Baker Hughes Company
Notes to Unaudited Condensed Consolidated Financial Statements
operating segments is evaluated based on segment operating income (loss), which is defined as income (loss) before income taxes before the following: net interest expense, net other non-operating income (loss), corporate expenses, restructuring, impairment and other charges, inventory impairments, and certain gains and losses not allocated to the operating segments. Consistent accounting policies have been applied by all segments within the Company, for all reporting periods. Intercompany revenue and expense amounts have been eliminated within each segment to report on the basis that management uses internally for evaluating segment performance.
Summarized financial information for the Company's segments is shown in the following tables.
Three Months Ended March 31,
Revenue20232022
Oilfield Services & Equipment$3,577 $3,017 
Industrial & Energy Technology2,138 1,818