# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

[X]	ANNUAL	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934

FOR	THE	FISCAL	YEAR	ENDED	DECEMBER	31,	2017

[	]	TRANSITION	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)

OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934

Commission	file	number	1-38143

# Baker	Hughes,	a	GE	company

(Exact	name	of	registrant	as	specified	in	its	charter)

Delaware

(State	or	other	jurisdiction	of	incorporation	or	organization)

17021	Aldine	Westfield	Road,	Houston,	Texas

(Address	of	principal	executive	offices)

(I.R.S.	Employer	Identification	No.)

(Zip	Code)

Registrant's	telephone	number,	including	area	code:	(713)	439-8600

Securities	registered	pursuant	to	Section	12(b)	of	the	Act:

Title	of	each	class

Class	A	Common	Stock,	$0.0001	Par	Value	per	Share

Class	B	Common	Stock,	$0.0001	Par	Value	per	Share

Name	of	each	exchange	on	which	registered

New	York	Stock	Exchange

Securities	registered	pursuant	to	Section	12(g)	of	the	Act:	None

Indicate	by	check	mark	if	the	registrant	is	a	well-known	seasoned	issuer,	as	defined	in	Rule	405	of	the	Securities	Act.	YES	[X]	NO	[	]

Indicate	by	check	mark	if	the	registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	15(d)	of	the	Act.	YES	[	]	NO	[X]

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	[X]	NO	[	]

Indicate	by	check	mark	whether	the	registrant	has	submitted	electronically	and	posted	on	its	corporate	website,	if	any,	every	Interactive	Data	File	required	to	be	submitted	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	and	post	such files).	YES	[X]	NO	[	]

Indicate	by	check	mark	if	disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	(§229.405	of	this	chapter)	is	not	contained	herein,	and	will	not	be	contained,	to	the best	of	registrant's	knowledge,	in	definitive	proxy	or	information	statements	incorporated	by	reference	in	Part	III	of	this	Form	10-K	or	any	amendment	to	this	Form	10-K.	[	]

Indicate	by	check	mark	whether	the	registrant	is	a	large	accelerated	filer,	an	accelerated	filer,	a	non-accelerated	filer,	a	smaller	reporting	company	or	an	emerging	growth	company. See	the	definitions	of	"large	accelerated	filer,"	"accelerated	filer"	"smaller	reporting	company"	and	"emerging	growth	company"	in	Rule	12b-2	of	the	Exchange	Act.	(Check	one):

Large	accelerated	filer	þ Accelerated	filer	o

Non-accelerated	filer	o Smaller	reporting	company	o Emerging	growth	company	o

(Do	not	check	if	a	smaller	reporting	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	Act).	YES	[	]	NO	[X]

The	aggregate	market	value	of	the	voting	and	non-voting	common	stock	held	by	(i)	non-affiliates	of	Baker	Hughes	Incorporated	(the	predecessor	issuer	of	the	registrant	pursuant	to Rule	12g-3(a)	under	the	Securities	Exchange	Act)	as	of	the	last	business	day	of	the	predecessor	issuer's	most	recently	completed	second	fiscal	quarter	(based	on	the	closing	price on	June	30,	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	reported	by	the New	York	Stock	Exchange)	were	approximately	$23,155,806,000	and	$15,903,777,000	respectively.

DOCUMENTS	INCORPORATED	BY	REFERENCE

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

# Table	of	Contents

# Part	I

|  |  | Page |
| :--- | :--- | :--- |
|  | Part\tI |  |
| Item\t1. | Business | 1 |
| Item\t1A. | Risk\tFactors | 11 |
| Item\t1B. | Unresolved\tStaff\tComments | 21 |
| Item\t2. | Properties | 21 |
| Item\t3. | Legal\tProceedings | 21 |
| Item\t4. | Mine\tSafety\tDisclosures | 21 |
|  | Part\tII |  |
| Item\t5. | Market\tfor\tRegistrant's\tCommon\tEquity,\tRelated\tStockholder\tMatters\tand\tIssuer\tPurchases\tof\tEquity\tSecurities | 22 |
| Item\t6. | Selected\tFinancial\tData | 25 |
| Item\t7. | Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations | 26 |
| Item\t7A. | Quantitative\tand\tQualitative\tDisclosures\tAbout\tMarket\tRisk | 45 |
| Item\t8. | Financial\tStatements\tand\tSupplementary\tData | 47 |
|  | Management's\tReport\ton\tInternal\tControl\tOver\tFinancial\tReporting | 47 |
|  | Report\tof\tIndependent\tRegistered\tPublic\tAccounting\tFirm | 48 |
|  | Consolidated\tand\tCombined\tStatements\tof\tIncome\t(Loss) | 51 |
|  | Consolidated\tand\tCombined\tStatements\tof\tComprehensive\tIncome\t(Loss) | 52 |
|  | Consolidated\tand\tCombined\tStatements\tof\tFinancial\tPosition | 53 |
|  | Consolidated\tand\tCombined\tStatements\tof\tChanges\tin\tEquity | 54 |
|  | Consolidated\tand\tCombined\tStatements\tof\tCash\tFlows | 55 |
|  | Notes\tto\tConsolidated\tand\tCombined\tFinancial\tStatements | 56 |
| Item\t9. | Changes\tin\tand\tDisagreements\twith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure | 102 |
| Item\t9A. | Controls\tand\tProcedures | 102 |
| Item\t9B. | Other\tInformation | 102 |
|  | Part\tIII |  |
| Item\t10. | Directors,\tExecutive\tOfficers\tand\tCorporate\tGovernance | 103 |
| Item\t11. | Executive\tCompensation | 103 |
| Item\t12. | Security\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand\tRelated\tStockholder\tMatters | 103 |
| Item\t13. | Certain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence | 104 |
| Item\t14. | Principal\tAccounting\tFees\tand\tServices | 104 |
|  | Part\tIV |  |
| Item\t15. | Exhibits | 105 |
|  | Signatures | 110 |

# Part	IV

# ITEM	1.	BUSINESS

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	Hughes),	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	capabilities	(refer	to	"Note	2.	Business	Acquisition"	of	the	Notes	to	the Consolidated	and	Combined	Financial	Statements	in	Item	8	herein	for	further	details	on	the	Transactions).	As	a	result	of	the	Transactions,	the	Company became	the	holding	company	of	the	combined	businesses	of	Baker	Hughes	and	GE	O&G.	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	LLC),	on	July	3,	2017.	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.	Accordingly,	we	consolidate	the	financial	results	of	BHGE	LLC	and	report	a	noncontrolling	interest	in	our consolidated	and	combined	financial	statements	for	the	economic	interest	in	BHGE	LLC	not	held	by	us.	We	are	a	holding	company	and	have	no	material assets	other	than	our	ownership	interest	in	BHGE	LLC	and	certain	intercompany	and	tax	related	balances.	BHGE	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.

The	Transactions	were	treated	as	a	"reverse	acquisition"	for	accounting	purposes	and,	as	such,	the	historical	financial	statements	of	the	accounting acquirer,	GE	O&G,	are	the	historical	financial	statements	of	the	Company.	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	historical financial	results	in	the	combined	financial	statements	presented	may	not	be	indicative	of	the	results	that	would	have	been	achieved	had	GE	O&G operated	as	a	separate,	stand-alone	entity	during	those	periods.	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.

# OUR	VISION

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.

We	believe	that	there	are	structural	changes	taking	place	in	the	oil	and	gas	industry	that	require	a	change	in	how	we	work.	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	intend	to	build	market	leading	product	companies	focused	on	comprehensively	reducing	product	and	service	costs,	while	improving equipment	efficiency	and	reliability	to	significantly	lower	project	breakeven	costs.

•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

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

# We	expect	to	benefit	from	the	following:

•Complete	fullstream	portfolio.		Leading	portfolio	capable	of	serving	upstream,	midstream	and	downstream	sectors	of	the	oil	and	gas	industry, matching	oilfield	service	and	equipment	leaders	in	many	areas.	Our	four	product	lines	-	Oilfield	Services;	Oilfield	Equipment;	Turbomachinery	& Process	Solutions;	and	Digital	Solutions,	as	discussed	below	under	"Products	and	Services,"	are	each	among	the	top	four	providers	in	their respective	segments.

•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.

•Digital	capabilities.		We	expect	to	be	able	to	continue	to	develop	software	offerings	on	any	operating	platform,	for	new	and	extended applications	in	the	oil	and	gas	and	other	industrial	ecosystems,	such	as	machine	and	equipment	health,	reliability	management	and	maintenance optimization.

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.	We	believe our	strategy	coupled	with	our	capabilities	will	help	us	compete	and	win	in	the	current	environment,	while	positioning	us	for	the	future.

# ORDERS	AND	BACKLOG

We	are	a	global	business	with	consolidated	2017	revenue	of	 $17,259	million.	We	generate	revenue	and	orders	from	a	combination	of	equipment sales	and	services.	In	2017,	42%	of	revenue	was	generated	from	equipment	sales	and	58%	from	services,	while	39%	of	orders	were	for	equipment	and 61%	for	services.	In	2016	and	2015,	46%	and	50%	of	revenue	was	generated	from	equipment	sales,	and	54%	and	50%	of	revenue	was	from	services, respectively.	We	recognized	orders	of	$17,376	million,	$11,273	million,	and	$15,385	million,	respectively,	in	2017,	2016	and	2015.	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.

Our	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	services	activities.	For	the	amounts	shown	above,	as	well	as	in	the orders	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.	We	refer	to	"product	services"	simply	as	"services"	within	this	Business	section	and	the	Management's	Discussion	and Analysis	of	Financial	Condition	and	Results	of	Operations	included	in	Item	7	in	this	Form	10-K.

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.

# PRODUCTS	AND	SERVICES

We	are	a	fullstream	provider	of	oilfield	products,	services	and	digital	solutions.	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.	Our	operating	segments	are	organized	based	on	the	nature	of	our	markets	and	customers.	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.

# Oilfield	Services

The	OFS	segment	provides	products	and	services	for	on	and	offshore	operations	across	the	lifecycle	of	a	well,	ranging	from	drilling,	evaluation, completion,	production	and	intervention.	The	segment	is	comprised	of	eight	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	systems	and	oilfield	and	industrial	chemicals.

OFS'	core	evaluation	and	drilling	technologies	provide	greater	understanding	of	the	subsurface	to	enable	smoother,	faster	drilling	and	precise wellbore	placement,	leading	to	improved	recovery	and	project	economics.	With	the	industry's	broadest	completions	portfolio,	OFS	can	provide	tailored well	integrity	solutions	for	all	well	types.	Drawing	from	a	wide	range	of	artificial	lift	technology,	coupled	with	enterprise	optimization	software,	OFS	can help	lower	the	cost	per	barrel	for	the	life	of	an	asset.

Our	customers	include	the	large	integrated	major	and	super-major	oil	and	natural	gas	companies,	U.S.	and	international	independent	oil	and	natural gas	companies	and	the	national	or	state-owned	oil	companies	as	well	as	oilfield	service	companies.

# Oilfield	Equipment

The	Oilfield	Equipment	(OFE)	segment	provides	a	broad	portfolio	of	products	and	services	required	to	facilitate	the	safe	and	reliable	flow	of hydrocarbons	from	the	subsea	wellhead	to	the	surface	production	facilities.	The	OFE	operation	designs	and	manufactures	onshore	and	offshore	drilling and	production	systems	and	equipment	for	floating	production	platforms	and	provides	a	full	range	of	services	related	to	onshore	and	offshore	drilling activities.

The	OFE	portfolio	includes	deepwater	drilling	equipment,	subsea	production	systems	(SPS),	flexible	pipe	systems,	and	related	service	solutions.	The OFE	drilling	and	production	systems	product	line	offers	blowout	preventers,	control	systems,	marine	drilling	risers,	wellhead	connectors,	diverters	and related	services.	OFE	offers	SPS,	including	trees,	control	systems,	manifolds,	connections,	wellheads,	specialty	connectors	&	pipes,	installation	and decommissioning	solutions,	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	&	offloading)-based	production	across	a	range	of	operating	environments.	Investment	in composite	technology	is	enabling	BHGE	to	extend	the	capabilities	of	BHGE's	flexibles	even	further.	OFE	also	offers	a	range	of	comprehensive,	worldwide services	for	installation,	technical	support,	well	access	through	subsea	intervention	systems,	operating	resources	and	tools,	offshore	products	and brownfield	asset	integrity	solutions.

OFE	customers	are	oil	and	gas	field	developers,	drilling	and	oil	companies	seeking	to	undertake	new	subsea	projects,	mid-life	upgrades	and maintenance,	well	interventions	and	workover	campaigns.	OFE	differentiates	itself	in	SPS	and	deepwater	drilling	systems.	OFE's	key	competitive	areas are	large-bore	gas	fields,	deepwater	oilfields	and	fields	with	long	tieback	distances.	In	addition	to	a	robust	presence	in	other	subsea	areas,	including high-pressure	high-temperature	(HPHT)	fields,	OFE's	product	lines'	production	systems	are	among	the	industry's	most	reliable,	with	uptime	of	the	critical control	system	exceeding	99.8%.

# Turbomachinery	&	Process	Solutions

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	control	and	other	industrial	applications.	The	TPS	segment	is	a	leader	in	designing, manufacturing,	maintaining	and	upgrading	rotating	equipment	across	the	oil	and	gas,	petro-chemical	and	industrial	sectors.

The	TPS	portfolio	includes	drivers,	driven	equipment,	flow	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	expanders	and	synchronous and	induction	electric	motors.	TPS'	driven	equipment	consists	of	electric	generators,	reciprocating,	centrifugal,	axial,	direct-drive	high	speed,	integrated and	subsea	compressors,	and	turbo-expanders.	TPS'	flow	control	includes	pumps,	valves,	regulators,	control	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	capture	and	storage/use	facilities.	TPS	also	offers	a	variety	of	system	upgrades	and	conversion	solutions,	from	a	single machine	to	full	plant	debottlenecking	and	modernization.

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	petro-chemicals,	while	minimizing	both	operational	and	environmental	risks	in	the	most extreme	service	conditions.	TPS'	customers	are	upstream,	midstream	and	downstream,	onshore	and	offshore,	and	small	to	large	scale.	Midstream	and downstream	customers	include	liquefied	natural	gas	(LNG)	plants,	pipelines,	storage	facilities,	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,	efficiency	and	reliability	for	oil	and	gas	assets.	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.

# Digital	Solutions

The	Digital	Solutions	(DS)	segment	provides	operating	technologies	helping	to	improve	the	health,	productivity	and	safety	of	asset	intensive industries	and	enable	the	Industrial	Internet	of	Things.	DS	includes	the	Measurement	&	Controls	business	for	industry-leading	hardware	technologies	as well	as	the	software	businesses	of	GE	Oil	&	Gas	and	Baker	Hughes	that	leverages	best-of-class	cloud	services,	including	GE's	Predix	application development	platform.

The	DS	portfolio	includes	condition	monitoring,	inspection	technologies,	measurement,	sensing	and	pipeline	solutions.	Condition	monitoring technologies	include	the	Bently	Nevada®	and	System	1®	brands,	providing	rack-based	vibration	monitoring	equipment,	sensors,	software	cyber	security solutions	and	industrial	controls	primarily	for	power	generation	and	oil	and	gas	operations.	The	DS	Inspection	Technologies	product	line	includes	non- destructive	testing	technology,	software,	and	services,	including	industrial	radiography,	ultrasonic	sensors,	testing	machines	and	gauges,	NDT	film,	and remote	visual	inspection.

The	DS	Process	and	Pipeline	Services	product	line	(PPS)	provides	pre-commissioning	and	maintenance	services	to	improve	throughput	and	asset integrity	for	process	facilities	and	pipelines	while	achieving	the	highest	returns	possible.	In	addition,	the	PPS	product	line	provides	inline	inspection solutions	to	support	pipeline	integrity	and	includes	nitrogen,	bolting,	torqueing	and	leak	detection	services,	as	well	as	the	world's	largest	fleet	of	air compressors	to	dry	pipelines	after	hydrotesting.	The	DS	Measurement	and	Sensing	product	line	provides	instrumentation	to	better	detect	and	analyze pressure,	flow,	gas,	and	moisture	conditions	and	more.

The	DS	segment	helps	companies	monitor	and	optimize	industrial	assets	while	mitigating	risk	and	boosting	safety,	by	providing	performance management,	and	condition	and	asset	health	monitoring.	It	also	provides

customers	the	technical	capabilities	to	drive	enterprise	wide	digital	transformation	of	business	processes	and	to	focus	on	better	production	outcomes along	the	entire	oil	&	gas	value	chain,	using	sensors,	services	and	inspections	to	connect	industrial	assets	to	the	Industrial	Internet.	The	DS	software portfolio	is	built	to	handle	big	data	at	an	industrial	scale	and	with	industrial-strength	security,	giving	customers	the	power	to	innovate	and	make	faster, more	confident	decisions.	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.

# MARKETS	AND	COMPETITION

We	sell	to	our	customers	through	direct	and	indirect	channels.	Our	primary	sales	channel	is	through	our	direct	sales	force,	which	has	a	strong regional	focus	with	local	teams	close	to	the	customer,	who	are	able	to	draw	support	from	centers	of	excellence	in	each	of	our	major	product	lines.	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.	No	single	customer	accounted	for	10%	or	more	of our	revenue	in	the	current	year.

Our	products	and	services	are	sold	in	highly	competitive	markets	and	the	competitive	environment	varies	by	produce	line,	as	discussed	below:

Our	OFS	product	line	believes	that	the	principal	competitive	factors	in	the	industries	and	markets	it	serves	are	product	and	service	quality,	reliability and	availability,	health,	safety	and	environmental	standards,	technical	proficiency	and	price.	Our	products	and	services	are	sold	in	highly	competitive markets	and	revenue	and	earnings	are	affected	by	changes	in	commodity	prices,	fluctuations	in	the	level	of	drilling,	workover	and	completion	activity	in major	markets,	general	economic	conditions,	foreign	currency	exchange	fluctuations	and	governmental	regulations.	While	we	may	have	contracts	with customers	that	include	multiple	well	projects	and	that	may	extend	over	a	period	of	time	ranging	from	two	to	four	years,	our	services	and	products	are generally	provided	on	a	well-by-well	basis.	Most	contracts	cover	our	pricing	of	the	products	and	services,	but	do	not	necessarily	establish	an	obligation	to use	our	products	and	services.	OFS	product	line	competitors	include	Schlumberger,	Halliburton	and	Weatherford	International.

Our	OFE	product	line	believes	that	the	principal	competitive	factors	in	the	industries	and	markets	it	serves	are	product	and	service	quality,	reliability and	on	time	delivery,	health,	safety	and	environmental	standards,	technical	proficiency,	availability	of	spare	parts	and	price.	Its	strong	track	record	of innovation	enables	OFE	to	enter	into	long-term,	performance-based	service	agreements	with	our	customers.	In	the	SPS	product	line,	the	primary competitors	of	OFE	include	Schlumberger,	TechnipFMC,	Aker	Solutions	ASA,	Proserv	and	Dril-Quip	Inc.	In	the	flexible	pipe	product	line,	competitors include	TechnipFMC,	National	Oilwell	Varco	(NOV),	Airborne,	and	Magma.	In	the	drilling	sub-product	line,	competitors	include	NOV,	Schlumberger	and Horn	Equipment.

Our	TPS	product	line	believes	that	the	principal	competitive	factors	in	the	industries	and	markets	it	serves	are	product	range	(or	power	range measured	in	Megawatts)	coverage,	efficiency,	product	reliability	and	availability,	service	capabilities,	packages,	references,	emissions	and	price.	In upstream	and	midstream	applications,	our	primary	equipment	competitors	include	Siemens	(Power	and	Gas	business	unit),	Solar	(a	Caterpillar company),	MAN	Turbo	and	Mitsubishi	Heavy	Industries.	In	downstream	applications,	TPS	primarily	competes	with	OEMs	and	independent	service providers,	including	Flowserve,	Pentair,	Emerson,	Siemens,	Hitachi,	Solar	(a	Caterpillar	company),	Ariel,	MAN	Turbo,	Burckhardt,	Elliott	Ebara	and Mitsubishi	Heavy	Industries.	Our	aftermarket	equipment	product	line	competes	with	smaller	independent	local	providers	such	as	Masaood	John	Brown, Sulzer,	MTU,	Trans	Canada	Turbine,	Chromalloy	and	Ethos	Energy	(a	joint	venture	of	Siemens	and	the	Wood	Group).

Our	DS	product	line	believes	that	the	principal	competitive	factors	in	the	industries	and	markets	it	serves	are	superior	product	technology,	service, quality,	and	reliability.	Our	DS	product	line	competes	across	a	wide	range	of	industries,	including	Oil	&	Gas,	Power	Generation,	Aerospace,	and	Light	and Heavy	Industrials.	The	products	and	services	are	sold	in	a	diversified,	fragmented	arena	with	a	broad	range	of	competitors.	Although	no	single	company competes	directly	with	DS	across	all	its	product	lines,	various	companies	compete	in	one	or	more	products.	Primary	competitors	include	Emerson,	ABB, Schneider	Electric,	Fortive,	Olympus,	Comet	Group,	Honeywell	Process	Solutions,	Roper	Technology,	Siemens,	Spectris,	Aspentech	and	OSISoft.

# CONTRACTS

We	conduct	our	business	under	various	types	of	contracts	in	the	upstream,	midstream,	and	downstream	segments,	including	fixed-fee	or	turnkey contracts,	transactional	agreements	for	products	and	services,	and	long-term	aftermarket	service	agreements.

We	enjoy	stable	relationships	with	many	of	our	customers	based	on	long-term	project	contracts	and	master	service	agreements.	Several	of	those contracts	require	us	to	commit	to	a	fixed	price	based	on	the	customer's	technical	specifications	with	little	or	no	legal	relief	available	due	to	changes	in circumstances,	such	as	changes	in	local	laws	or	industry	or	geopolitical	events.	In	some	cases,	failure	to	deliver	products	or	perform	services	within contractual	commitments	may	lead	to	liquidated	damages	claims.	We	seek	to	mitigate	these	exposures	through	close	collaboration	with	our	customers.

We	strive	to	negotiate	the	terms	of	our	customer	contracts	consistent	with	what	we	consider	to	be	industry	best	practices.	Our	customers	typically indemnify	us	for	certain	claims	arising	from:	the	injury	or	death	of	their	employees	and	often	their	other	contractors;	the	loss	of	or	damage	to	their equipment	and	often	that	of	their	other	contractors;	pollution	originating	from	their	equipment	or	facility;	and	all	liabilities	related	to	the	well	and	subsurface operations,	including	loss	or	damage	to	the	well	or	reservoir,	loss	of	well	control,	fire,	explosion,	or	any	uncontrolled	flow	of	oil	or	gas.	Conversely,	we typically	indemnify	our	customers	for	certain	claims	arising	from:	the	injury	or	death	of	our	employees	and	sometimes	that	of	our	subcontractors;	the	loss of	or	damage	to	our	equipment	(other	than	equipment	lost	in	the	hole);	and	pollution	originating	from	our	equipment	above	the	surface	of	the	earth	while in	our	care,	custody,	and	control.	Where	the	above	indemnities	do	not	apply	or	are	not	consistent	with	industry	best	practices,	we	typically	provide	a capped	indemnity	for	damages	caused	to	the	customer	by	our	negligence	or	the	negligence	of	our	contractors,	and	include	an	overall	limitation	of	liability clause.	It	is	also	our	general	practice	to	include	a	limitation	of	liability	for	consequential	loss,	including	loss	of	profits	and	loss	of	revenue,	in	all	customer contracts.

Our	indemnity	structure	may	not	protect	us	in	every	case.	Certain	U.S.	states	such	as	Texas,	Louisiana,	Wyoming,	and	New	Mexico	have	enacted	oil and	natural	gas	specific	anti-indemnity	statutes.	These	statutes	can	void	the	allocation	of	liability	agreed	to	in	a	contract,	however,	both	the	Texas	and Louisiana	anti-indemnity	statutes	include	important	exclusions.	The	Louisiana	statute	does	not	apply	to	property	damage,	and	the	Texas	statute	allows mutual	indemnity	agreements	that	are	supported	by	insurance	and	has	exclusions,	which	include,	among	other	things,	loss	or	liability	for	property damage	that	results	from	pollution	and	the	cost	of	well	control	events.	State	law,	laws	or	public	policy	in	countries	outside	the	U.S.,	or	the	negotiated terms	of	a	customer	contract	may	also	limit	indemnity	obligations	in	the	event	of	the	gross	negligence	or	willful	misconduct.	We	sometimes	contract	with customers	that	are	not	the	end	user	of	our	products.	It	is	our	practice	to	seek	to	obtain	an	indemnity	from	our	customer	for	any	end-user	claims,	but	this	is not	always	possible.	Similarly,	government	agencies	and	other	third	parties,	including	in	some	cases	other	contractors	of	our	customers,	may	make claims	in	respect	of	which	we	are	not	indemnified	and	for	which	responsibility	is	assessed	proportionate	to	fault.	In	all	cases,	deviations	from	our	standard contracting	practices	are	examined	through	an	established	risk	deviation	process.

The	Company	maintains	a	commercial	general	liability	insurance	policy	program	that	covers	against	certain	operating	hazards,	including	product liability	claims	and	personal	injury	claims,	as	well	as	certain	limited	environmental	pollution	claims	for	damage	to	a	third	party	or	its	property	arising	out	of contact	with	pollution	for	which	the	Company	is	liable,	however,	clean	up	and	well	control	costs	are	not	covered	by	such	program.	All	of	the	insurance policies	purchased	by	the	Company	are	subject	to	deductible	and/or	self-insured	retention	amounts	for	which	we	are	responsible	for	payment,	specific terms,	conditions,	limitations	and	exclusions.	There	can	be	no

assurance	that	the	nature	and	amount	of	Company	insurance	will	be	sufficient	to	fully	indemnify	us	against	liabilities	related	to	our	business.

# RESEARCH	AND	DEVELOPMENT

We	engage	in	research	and	development	activities	directed	primarily	toward	the	development	of	new	products,	services,	technology	and	other solutions,	as	well	as	the	improvement	of	existing	products	and	services	and	the	design	of	specialized	products	to	meet	specific	customer	needs.	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.

In	the	OFS	and	OFE	product	lines,	we	continue	to	invest	in	products	to	develop	capability,	improve	performance	and	reduce	costs.	In	OFS,	we invested	in	a	range	of	formation	evaluation	capabilities	and	drilling	services	hardware.	This	included	a	new	and	cutting-edge	line	of	drill	bits	with	hydraulic actuators	that	offer	customers	improvements	in	reliability,	efficiency	and	maintainability.	In	OFE,	the	recent	focus	has	been	to	expand	capability	into deeper	water,	longer	offsets	and	at	higher	pressures.	Additionally,	subsea	power	and	processing	is	also	an	area	in	which	we	are	investing,	covering	both pumping	and	compression.	In	the	TPS	product	line,	we	continue	to	invest	in	continuous	product	improvement	of	reciprocating	and	centrifugal compressors,	using	advanced	fluid	dynamic	simulation	and	advanced	aeromechanics	to	improve	capability,	operability	and	efficiency	of	its	centrifugal compressors	family.	DS	continues	to	invest	in	advanced	digital	solutions	designed	to	improve	the	efficiency,	reliability	and	safety	of	oil	and	gas	production operations.	These	systems	integrate	operational	data	from	producing	oil	and	gas	facilities	to	deliver	notifications	and	analytical	reports	to	engineers	so they	can	identify	operational	performance	issues	before	they	become	significant,	thus	helping	to	prevent	unplanned	downtime	and	improve	facility reliability.

# INTELLECTUAL	PROPERTY

Our	technology,	brands	and	other	intellectual	property	rights	are	important	elements	of	our	business.	We	rely	on	patent,	trademark,	copyright	and trade	secret	laws,	as	well	as	non-disclosure	and	employee	invention	assignment	agreements	to	protect	our	intellectual	property	rights.	Many	of	the patents	and	patent	applications	in	our	portfolio	are	owned	by	us,	while	other	patents	and	patent	applications	in	our	portfolio	are	licensed	to	us	by	GE	and third	parties.	We	do	not	consider	any	individual	patent	or	trademark	to	be	material	to	our	business	operations.

In	connection	with	the	Transactions,	GE	entered	into	an	IP	cross-license	agreement	(the	IP	Cross-License	Agreement)	with	BHGE	LLC.	GE	agreed to	perpetually	license	to	BHGE	LLC	the	right	to	use	certain	intellectual	property	owned	or	controlled	by	GE	(other	than	GE	Digital)	pursuant	to	the	terms	of the	IP	Cross-License	Agreement.	BHGE	LLC	agreed	to	perpetually	license	to	GE	the	right	to	use	certain	intellectual	property	rights	pursuant	to	the	terms of	the	IP	Cross-License	Agreement.	This	license	allows	BHGE	LLC	to	have	continued	rights	to	use	some	of	GE's	intellectual	property	so	that	they	can	be leveraged	pursuant	to	the	terms	of	the	IP	Cross-License	Agreement.	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.

We	have	followed	a	policy	of	seeking	patent	and	trademark	protection	in	numerous	countries	and	regions	throughout	the	world	for	products	and methods	that	appear	to	have	commercial	significance.	We	believe	that	protection	of	our	patents,	trademarks,	and	related	intellectual	property	rights	is central	to	the	conduct	of	our	business,	and	aggressively	pursue	protection	of	our	intellectual	property	rights	against	infringement	worldwide	as	we	deem appropriate	to	protect	our	business.	Additionally,	we	consider	the	quality	and	timely	delivery	of	our	products,	the	service	we	provide	to	our	customers	and the	technical	knowledge	and	skills	of	our	personnel	to	be	other	important	components	of	the	portfolio	of	capabilities	and	assets	supporting	our	ability	to compete.

# SEASONALITY

Our	operations	can	be	affected	by	seasonal	weather,	which	can	temporarily	affect	the	delivery	and	performance	of	our	products	and	services,	and our	customers'	budgetary	cycles.	Examples	of	seasonal	events	that	can	impact	our	business	are	set	forth	below:

•The	severity	and	duration	of	both	the	summer	and	the	winter	in	North	America	can	have	a	significant	impact	on	activity	levels.	In	Canada,	the timing	and	duration	of	the	spring	thaw	directly	affects	activity	levels,	which	reach	seasonal	lows	during	the	second	quarter	and	build	through	the third	and	fourth	quarters	to	a	seasonal	high	in	the	first	quarter.

•Adverse	weather	conditions,	such	as	hurricanes	in	the	Gulf	of	Mexico,	may	interrupt	or	curtail	our	coastal	and	offshore	drilling,	or	our	customers' operations,	cause	supply	disruptions	and	result	in	a	loss	of	revenue	and	damage	to	our	equipment	and	facilities,	which	may	or	may	not	be insured.

•Severe	weather	during	the	winter	months	normally	results	in	reduced	activity	levels	in	the	North	Sea	and	Russia	generally	in	the	first	quarter	and may	interrupt	or	curtail	our	operations,	or	our	customers'	operations,	in	those	areas	and	result	in	a	loss	of	revenue.

•Scheduled	repair	and	maintenance	of	offshore	facilities	in	the	North	Sea	can	reduce	activity	in	the	second	and	third	quarters.

•Many	of	our	international	oilfield	customers	increase	orders	for	certain	products	and	services	in	the	fourth	quarter.

•Our	process	&	pipeline	business	in	the	DS	segment	typically	experiences	lower	sales	during	the	first	and	fourth	quarters	of	the	year	due	to	the Northern	Hemisphere	winter.

•Our	broader	DS	business	typically	experiences	higher	customer	activity	as	a	result	of	spending	patterns	in	the	second	half	of	the	year.

# RAW	MATERIALS

We	purchase	various	raw	materials	and	component	parts	for	use	in	manufacturing	our	products	and	delivering	our	services.		The	principal	raw materials	we	use	include	steel	alloys,	chromium,	nickel,	titanium,	barite,	beryllium,	copper,	lead,	tungsten	carbide,	synthetic	and	natural	diamonds,	gels, sand	and	other	proppants,	printed	circuit	boards	and	other	electronic	components	and	hydrocarbon-based	chemical	feed	stocks.		Raw	materials	that	are essential	to	our	business	are	normally	readily	available	from	multiple	sources,	but	may	be	subject	to	price	volatility.		Market	conditions	can	trigger constraints	in	the	supply	of	certain	raw	materials,	and	we	are	always	seeking	ways	to	ensure	the	availability	and	manage	the	cost	of	raw	materials.		Our procurement	department	uses	its	size	and	buying	power	to	enhance	its	access	to	key	materials	at	competitive	prices.

In	addition	to	raw	materials	and	component	parts,	we	also	use	the	products	and	services	of	metal	fabricators,	machine	shops,	foundries,	forge shops,	assembly	operations,	contract	manufacturers,	logistics	providers,	packagers,	indirect	material	providers,	and	others	in	order	to	produce	and deliver	products	to	customers.		These	materials	and	services	are	generally	available	from	multiple	sources.

# EMPLOYEES

As	of	December	31,	2017,	we	had	over	64,000	employees,	of	which	the	majority	are	outside	the	U.S.	Approximately	11%	of	these	employees	are represented	under	collective	bargaining	agreements	or	similar-type	labor	arrangements.

# ENVIRONMENTAL	MATTERS

We	are	committed	to	the	health	and	safety	of	people,	protection	of	the	environment	and	compliance	with	environmental	laws,	regulations	and	our policies.	Our	past	and	present	operations	include	activities	that	are	subject	to	extensive	domestic	(including	U.S.	federal,	state	and	local)	and	international regulations	with	regard	to	air,	land	and	water	quality	and	other	environmental	matters.	Regulations	continue	to	evolve,	and	changes	in	standards	of enforcement	of	existing	regulations,	as	well	as	the	enactment	of	new	legislation,	may	require	us	and	our	customers	to	modify,	supplement	or	replace equipment	or	facilities	or	to	change	or	discontinue	present	methods	of	operation.	Our	environmental	compliance	expenditures	and	our	capital	costs	for environmental	control	equipment	may	change	accordingly.

We	are,	and	may	in	the	future	be,	involved	in	voluntary	remediation	projects	at	current	and	former	properties.	On	rare	occasions,	our	remediation activities	are	conducted	as	specified	by	a	government	agency-issued	consent	decree	or	agreed	order.	Remediation	costs	at	these	properties	are	accrued using	currently	available	facts,	existing	environmental	permits,	technology	and	presently	enacted	laws	and	regulations.	For	sites	where	we	are	primarily responsible	for	the	remediation,	our	cost	estimates	are	developed	based	on	internal	evaluations	and	are	not	discounted.	We	record	accruals	when	it	is probable	that	we	will	be	obligated	to	pay	amounts	for	environmental	site	evaluation,	remediation	or	related	activities,	and	such	amounts	can	be reasonably	estimated.	Accruals	are	recorded	even	if	significant	uncertainties	exist	over	the	ultimate	cost	of	the	remediation.	Ongoing	environmental compliance	costs,	such	as	obtaining	environmental	permits,	installation	and	maintenance	of	pollution	control	equipment	and	waste	disposal,	are expensed	as	incurred.

The	Comprehensive	Environmental	Response,	Compensation	and	Liability	Act	(known	as	"Superfund")	imposes	liability	for	the	release	of	a "hazardous	substance"	into	the	environment.	Superfund	liability	is	imposed	without	regard	to	fault,	even	if	the	waste	disposal	was	in	compliance	with laws	and	regulations.	We	have	been	identified	as	a	potentially	responsible	party	(PRP)	at	various	Superfund	sites,	and	we	accrue	our	share	of	the estimated	remediation	costs	for	the	site.	PRPs	in	Superfund	actions	have	joint	and	several	liability	and	may	be	required	to	pay	more	than	their proportional	share	of	such	costs.

In	some	cases,	it	is	not	possible	to	quantify	our	ultimate	exposure	because	the	projects	are	either	in	the	investigative	or	early	remediation	stage,	or superfund	allocation	information	is	not	yet	available.	Based	upon	current	information,	we	believe	that	our	overall	compliance	with	environmental regulations,	including	remediation	obligations,	environmental	compliance	costs	and	capital	expenditures	for	environmental	control	equipment,	will	not have	a	material	adverse	effect	on	our	capital	expenditures,	earnings	or	competitive	position	because	we	have	either	established	adequate	reserves	or	our compliance	cost,	based	on	available	information,	is	not	expected	to	be	material	to	our	consolidated	and	combined	financial	statements.	Our	total	accrual for	environmental	remediation	was	$82	million	and	$28	million	at	December	31,	2017	and	2016,	respectively.	We	continue	to	focus	on	reducing	future environmental	liabilities	by	maintaining	appropriate	Company	standards	and	by	improving	our	assurance	programs.

# AVAILABILITY	OF	INFORMATION	FOR	STOCKHOLDERS

Our	annual	reports	on	Form	10-K,	quarterly	reports	on	Form	10-Q,	current	reports	on	Form	8-K	and	amendments	to	those	reports	filed	or	furnished pursuant	to	Section	13(a)	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	as	amended	(Exchange	Act),	are	made	available	free	of	charge	on	our	Internet website	at	www.bhge.com	as	soon	as	reasonably	practicable	after	these	reports	have	been	electronically	filed	with,	or	furnished	to,	the	SEC.	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.	Information	contained	on	or connected	to	our	website	is	not	incorporated	by	reference	into	this	annual	report	on	Form	10-K	and	should	not	be	considered	part	of	this	annual	report	or any	other	filing	we	make	with	the	SEC.

We	have	a	Code	of	Conduct	to	provide	guidance	to	our	directors,	officers	and	employees	on	matters	of	business	conduct	and	ethics,	including compliance	standards	and	procedures.	We	have	also	required	our	principal	executive	officer,	principal	financial	officer	and	principal	accounting	officer	to sign	a	Code	of	Ethical	Conduct	Certification.

Our	Code	of	Conduct	and	Code	of	Ethical	Conduct	Certifications	are	available	on	the	Investor	section	of	our	website	at www.bhge.com.	We	will disclose	on	a	current	report	on	Form	8-K	or	on	our	website	information	about

any	amendment	or	waiver	of	these	codes	for	our	executive	officers	and	directors.	Waiver	information	disclosed	on	our	website	will	remain	on	the	website for	at	least	12	months	after	the	initial	disclosure	of	a	waiver.	Our	Governance	Principles	and	the	charters	of	our	Audit	Committee,	Compensation Committee	and	Governance	and	Nominating	Committee	are	also	available	on	the	Investor	section	of	our	website	at	www.bhge.com.	In	addition,	a	copy	of our	Code	of	Conduct,	Code	of	Ethical	Conduct	Certifications,	Governance	Principles	and	the	charters	of	the	committees	referenced	above	are	available in	print	at	no	cost	to	any	stockholder	who	requests	them.

# EXECUTIVE	OFFICERS	OF	BAKER	HUGHES,	A	GE	COMPANY

The	following	table	shows,	as	of	February	23,	2018,	the	name	of	each	of	our	executive	officers,	together	with	his	or	her	age	and	office	presently	or previously	held.	There	are	no	family	relationships	among	our	executive	officers.

Name Age Position	and	Background Lorenzo	Simonelli 44 Chairman,	President	and	Chief	Executive	Officer Lorenzo	Simonelli	has	been	the	Chairman	of	the	Board	of	Directors	of	the	Company	since	October	2017,	and	a Director,	President	and	Chief	Executive	Officer	of	the	Company	since	July	2017.	Before	joining	the	Company	in July	2017,	Mr.	Simonelli	was	Senior	Vice	President,	GE	and	President	and	Chief	Executive	Officer,	GE	Oil	&	Gas from	October	2013	to	July	2017.	Before	joining	GE	Oil	&	Gas,	he	was	the	President	and	Chief	Executive	Officer of	GE	Transportation	from	July	2008	to	October	2013.	Mr.	Simonelli	joined	GE	in	1994	and	held	various	finance and	leadership	roles	from	1994	to	2008. Brian	Worrell 48 Chief	Financial	Officer Brian	Worrell	is	the	Chief	Financial	Officer	of	the	Company.	Prior	to	joining	the	Company	in	July	2017,	he	served as	Vice	President	and	Chief	Financial	Officer	of	GE	Oil	&	Gas	from	January	2014	to	July	2017.	He	previously held	the	position	of	Vice	President,	Financial	Planning	&	Analysis	for	GE	from	2010	to	January	2014	and	Vice President	Corporate	Audit	Staff	for	GE	from	2006	to	2010. Maria	Claudia	Borras 49 President,	Oilfield	Services Maria	Claudia	Borras	is	the	President	and	Chief	Executive	Officer,	Oilfield	Services	of	the	Company.	Before joining	the	Company	in	July	2017,	she	served	as	the	Chief	Commercial	Officer	of	GE	Oil	&	Gas	from	December 2014	 to	 July	 2017.	Prior	 to	 joining	 GE	 Oil	 &	 Gas,	 she	 held	 various	 leadership	 positions	 at	 Baker	 Hughes Incorporated	including	President,	Latin	America	from	October	2013	to	January	2015,	President	Europe	Region from	August	2011	to	October	2013,	Vice	President,	Global	Marketing	from	May	2009	to	July	2011	and	other leadership	roles	at	Baker	Hughes	Incorporated	from	1994	to	April	2009. Kurt	Camilleri 43 Vice	President,	Controller	and	Chief	Accounting	Officer

Kurt	Camilleri	is	the	Vice	President,	Controller	and	Chief	Accounting	Officer	of	the	Company.	Prior	to	joining	the Company	in	July	2017,	he	served	as	the	Global	Controller	for	GE	Oil	&	Gas	from	July	2013	to	July	2017.	Mr. Camilleri	 served	 as	 the	 Global	 Controller	 for	 GE	 Transportation	 from	 January	 2013	 to	 June	 2013	 and	 the Controller	for	Europe	and	Eastern	and	African	Growth	Markets	for	GE	Healthcare	from	2010	to	January	2013.	He began	 his	 career	 in	 1996	 with	 Pricewaterhouse	 in	 London,	 which	 subsequently	 became PricewaterhouseCoopers.

Rod	 Christie	 is	 the	 President	 and	 Chief	 Executive	 Officer	 of	 Turbomachinery	 &	 Process	 Solutions	 of	 the Company.	 	 Prior	 to	 joining	 the	 Company	 in	 July	 2017,	 he	 served	 as	 the	 Chief	 Executive	 Officer	 of Turbomachinery	&	Process	Solutions	at	GE	Oil	&	Gas	from	January	2016	to	July	2017.	He	served	as	the	Chief Executive	Officer	of	GE	Oil	&	Gas'	Subsea	Systems	&	Drilling	Business	from	August	2011	to	2016	and	held various	other	leadership	positions	within	GE	between	1999	to	2011.

Name Age Position	and	Background Matthias	Heilmann 49 President,	Digital	Solutions Matthias	Heilmann	is	the	President	and	Chief	Executive	Officer	of	Digital	Solutions	of	the	Company.	Prior	to joining	the	Company	in	July	2017,	he	served	as	the	Chief	Digital	Officer,	President	&	Chief	Executive	Officer	of Digital	Solutions	within	GE	Oil	&	Gas	from	2016	through	July	2017.	Prior	to	joining	GE	Oil	&	Gas,	he	led	ABB's Global	Product	Group	Enterprise	Software	business	from	June	2014	to	January	2016.	He	served	as	the	Chief Operating	Officer	of	Ryerson	Holding	Corporation	from	March	2010	until	January	2012	and	served	as	Executive Vice	President	and	Chief	Operating	Officer	of	Ryerson	Inc.	from	January	2009	to	January	2012. William	D.	Marsh 55 Chief	Legal	Officer William	D.	Marsh	 is	 the	Chief	Legal	Officer	of	 the	Company.	Prior	 to	 joining	 the	Company	 in	July	2017,	he served	as	the	Vice	President	and	General	Counsel	of	Baker	Hughes	Incorporated	from	February	2013	to	July 2017.	He	previously	served	as	the	Vice	President-Legal	for	Western	Hemisphere	at	Baker	Hughes	Incorporated from	May	2009	to	February	2013	and	held	various	executive,	legal	and	corporate	roles	within	Baker	Hughes Incorporated	from	1998	to	2009. Derek	Mathieson 47 Chief	Marketing	and	Technology	Officer Derek	Mathieson	is	the	Chief	Marketing	and	Technology	Officer	of	the	Company.	Prior	to	joining	the	Company	in July	 2017,	 he	 served	 in	 various	 leadership	 roles	 at	 Baker	 Hughes	 Incorporated	 including	 Chief	 Integration Officer	 from	 October	 2016	 to	 July	 2017;	 Chief	 Commercial	 Officer	 from	 May	 2016	 to	 October	 2016;	 Chief Technology	and	Marketing	Officer	from	September	2015	to	May	2016;	Chief	Strategy	Officer	from	October	2013 to	September	2015;	President	Western	Hemisphere	Operations	from	2012	to	2013;	President,	Products	and Technology	from	May	2009	to	January	2012;	and	Chief	Technology	and	Marketing	Officer	from	December	2008 to	May	2009. Neil	Saunders 48 President,	Oilfield	Equipment Neil	Saunders	is	the	President	and	Chief	Executive	Officer	of	Oilfield	Equipment	of	the	Company.	Prior	to	joining the	Company	in	July	2017,	he	served	as	the	President	and	Chief	Executive	Officer	of	the	Subsea	Systems	& Drilling	 business	 at	 GE	 Oil	 &	 Gas	 from	 July	 2016	 to	 July	 2017	 and	 the	 Senior	 Vice	 President	 for	 Subsea Production	Systems	from	August	2011	to	July	2016.	He	served	in	various	leadership	roles	within	GE	Oil	&	Gas from	2007	to	August	2011. Uwem	Ukpong 46 Chief	Global	Operations	Officer

Uwem	Ukpong	is	the	Chief	Global	Operations	Officer	of	the	Company.	Prior	to	this	role,	he	served	as	the	Chief Integration	Officer	of	the	Company	from	July	2017	to	January	2018.	He	served	as	Vice	President,	Baker	Hughes Integration	for	GE	Oil	&	Gas	from	October	2016	to	July	2017	and	President	and	CEO	of	the	GE	Oil	&	Gas Surface	 Business	 from	 January	 2016	 to	 October	 2016.	He	 held	 various	 technical	 and	 leadership	 roles	 at Schlumberger	from	1993	to	2015.

# ITEM	1A.	RISK	FACTORS

An	investment	in	our	common	stock	involves	various	risks.	When	considering	an	investment	in	the	Company,	one	should	carefully	consider	all	of	the risk	factors	described	below,	as	well	as	other	information	included	and	incorporated	by	reference	in	this	annual	report.	There	may	be	additional	risks, uncertainties	and	matters	not	listed	below,	that	we	are	unaware	of,	or	that	we	currently	consider	immaterial.	Any	of	these	may	adversely	affect	our business,	financial	condition,	results	of	operations	and	cash	flows	and,	thus,	the	value	of	an	investment	in	the	Company.

# Risk	Factors	Related	to	Our	Business

We	operate	in	a	highly	competitive	environment,	which	may	adversely	affect	our	ability	to	succeed.

We	operate	in	a	highly	competitive	environment	for	marketing	oilfield	products	and	services	and	securing	equipment	and	trained	personnel.	Our ability	to	continually	provide	competitive	products	and	services	can	impact	our	ability	to	defend,	maintain	or	increase	prices	for	our	products	and	services, maintain	market	share,	and	negotiate	acceptable	contract	terms	with	our	customers.	In	order	to	be	competitive,	we	must	provide	new

technologies,	reliable	products	and	services	that	perform	as	expected	and	that	create	value	for	our	customers,	and	successfully	recruit,	train	and	retain competent	personnel.

In	addition,	our	investments	in	new	technologies	and	properties,	plants	and	equipment	may	not	provide	competitive	returns.	Our	ability	to	defend, maintain	or	increase	prices	for	our	products	and	services	is	in	part	dependent	on	the	industry's	capacity	relative	to	customer	demand,	and	on	our	ability	to differentiate	the	value	delivered	by	our	products	and	services	from	our	competitors'	products	and	services.	Managing	development	of	competitive technology	and	new	product	introductions	on	a	forecasted	schedule	and	at	a	forecasted	cost	can	impact	our	financial	results.	If	we	are	unable	to	continue to	develop	and	produce	competitive	technology	or	deliver	it	to	our	clients	in	a	timely	and	cost-competitive	manner	in	various	markets	in	which	we	operate, or	if	competing	technology	accelerates	the	obsolescence	of	any	of	our	products	or	services,	any	competitive	advantage	that	we	may	hold,	and	in	turn,	our business,	financial	condition	and	results	of	operations	could	be	materially	and	adversely	affected.

The	high	cost	or	unavailability	of	infrastructure,	materials,	equipment,	supplies	and	personnel,	particularly	in	periods	of	rapid	growth,	could	adversely affect	our	ability	to	execute	our	operations	on	a	timely	basis.

Our	manufacturing	operations	are	dependent	on	having	sufficient	raw	materials,	component	parts	and	manufacturing	capacity	available	to	meet	our manufacturing	plans	at	a	reasonable	cost	while	minimizing	inventories.	Our	ability	to	effectively	manage	our	manufacturing	operations	and	meet	these goals	can	have	an	impact	on	our	business,	including	our	ability	to	meet	our	manufacturing	plans	and	revenue	goals,	control	costs,	and	avoid	shortages	or over-supply	of	raw	materials	and	component	parts.	Raw	materials	and	components	of	particular	concern	include	steel	alloys	(including	chromium	and nickel),	titanium,	barite,	beryllium,	copper,	lead,	tungsten	carbide,	synthetic	and	natural	diamonds,	gels,	sand	and	other	proppants,	printed	circuit	boards and	other	electronic	components	and	hydrocarbon-based	chemical	feed	stocks.	Our	ability	to	repair	or	replace	equipment	damaged	or	lost	in	the	well	can also	impact	our	ability	to	service	our	customers.	A	lack	of	manufacturing	capacity	could	result	in	increased	backlog,	which	may	limit	our	ability	to	respond to	orders	with	short	lead	times.

People	are	a	key	resource	to	developing,	manufacturing	and	delivering	our	products	and	services	to	our	customers	around	the	world.	Our	ability	to manage	the	recruiting,	training,	retention	and	efficient	usage	of	the	highly	skilled	workforce	required	by	our	plans	and	to	manage	the	associated	costs could	impact	our	business.	A	well-trained,	motivated	workforce	has	a	positive	impact	on	our	ability	to	attract	and	retain	business.	Periods	of	rapid	growth present	a	challenge	to	us	and	our	industry	to	recruit,	train	and	retain	our	employees,	while	also	managing	the	impact	of	wage	inflation	and	the	limited available	qualified	labor	in	the	markets	where	we	operate.

Likewise,	if	the	economy	or	markets	decline	or	other	changes	occur,	we	may	have	to	reduce	utilization	of	our	assets	or	adjust	our	workforce	to	control costs,	which	may	cause	us	to	lose	some	of	our	skilled	employees.	Labor-related	actions,	including	strikes,	slowdowns	and	facility	occupations	can	also have	a	negative	impact	on	our	business.

Our	business	could	be	impacted	by	geopolitical	and	terrorism	threats	in	countries	where	we	or	our	customers	do	business	and	our	business	operations may	be	impacted	by	civil	unrest,	government	expropriations	and/or	epidemic	outbreaks.

Geopolitical	and	terrorism	risks	continue	to	grow	in	a	number	of	key	countries	where	we	currently	or	may	in	the	future	do	business.	Geopolitical	and terrorism	risks	could	lead	to,	among	other	things,	a	loss	of	our	investment	in	the	country,	impairment	of	the	safety	of	our	employees	and	impairment	of	our or	our	customers'	ability	to	conduct	operations.

In	addition	to	other	geopolitical	and	terrorism	risks,	civil	unrest	continues	to	grow	in	a	number	of	key	countries	where	we	do	business.	Our	ability	to conduct	business	operations	may	be	impacted	by	that	civil	unrest	and	our	assets	in	these	countries	may	also	be	subject	to	expropriation	by	governments or	other	parties	involved	in	civil	unrest.	Epidemic	outbreaks	may	also	impact	our	business	operations	by,	among	other	things,	restricting	travel	to	protect the	health	and	welfare	of	our	employees	and	decisions	by	our	customers	to	curtail	or	stop	operations	in	impacted	areas.

Compliance	with	and	changes	in	laws	could	be	costly	and	could	affect	operating	results.	In	addition,	government	disruptions	could	negatively	impact	our ability	to	conduct	our	business.

We	have	operations	in	the	United	States	and	in	more	than	120	countries	that	can	be	impacted	by	expected	and	unexpected	changes	in	the	legal	and business	environments	in	which	we	operate.	Compliance-related	issues	could	also	limit	our	ability	to	do	business	in	certain	countries	and	impact	our earnings.	Changes	that	could	impact	the	legal	environment	include	new	legislation,	new	regulations,	new	policies,	investigations	and	legal	proceedings and	new	interpretations	of	existing	legal	rules	and	regulations,	in	particular,	changes	in	export	control	laws	or	exchange	control	laws,	additional restrictions	on	doing	business	in	countries	subject	to	sanctions,	and	changes	in	laws	in	countries	where	we	operate.	In	addition,	changes	and	uncertainty in	the	political	environments	in	which	our	businesses	operate	can	have	a	material	effect	on	the	laws,	rules,	and	regulations	that	affect	our	operations. Government	disruptions	may	also	delay	or	halt	the	granting	and	renewal	of	permits,	licenses	and	other	items	required	by	us	and	our	customers	to	conduct our	business.	The	continued	success	of	our	global	business	and	operations	depends,	in	part,	on	our	ability	to	continue	to	anticipate	and	effectively manage	these	and	other	political,	legal	and	regulatory	risks.

Increased	cybersecurity	requirements,	vulnerabilities,	threats	and	more	sophisticated	and	targeted	computer	crime	could	pose	risks	to	our	systems, networks,	products,	solutions,	services	and	data.

Increased	global	cybersecurity	vulnerabilities,	threats	and	more	sophisticated	and	targeted	cyber-related	attacks	pose	risks	to	our	systems,	networks, products,	solutions,	services	and	data.	Cybersecurity	attacks	also	pose	risks	to	our	customers',	partners',	suppliers'	and	third-party	service	providers' products,	systems	and	networks	and	the	confidentiality,	availability	and	integrity	of	our	and	our	customers'	data.	While	we	attempt	to	mitigate	these	risks, we	remain	vulnerable	to	additional	known	or	unknown	threats.	Given	our	global	footprint,	the	large	number	of	customers	with	which	we	do	business,	and the	increasing	sophistication	of	cyber	attacks,	a	cyber	attack	could	occur	and	persist	for	an	extended	period	of	time	without	detection.	We	expect	that	any investigation	of	a	cyber	attack	would	be	inherently	unpredictable	and	that	it	would	take	time	before	the	completion	of	any	investigation	and	before	there	is availability	of	full	and	reliable	information.	During	such	time	we	would	not	necessarily	know	the	extent	of	the	harm	or	how	best	to	remediate	it,	and	certain errors	or	actions	could	be	repeated	or	compounded	before	they	are	discovered	and	remediated,	all	or	any	of	which	would	further	increase	the	costs	and consequences	of	a	cyber	attack.

We	also	may	have	access	to	sensitive,	confidential	or	personal	data	or	information	in	certain	of	our	businesses	that	is	subject	to	privacy	and	security laws,	regulations	and	customer-imposed	controls.	Despite	our	efforts	to	protect	sensitive,	confidential	or	personal	data	or	information,	we	may	be vulnerable	to	material	security	breaches,	theft,	misplaced	or	lost	data,	programming	errors,	employee	errors	and/or	malfeasance	that	could	potentially lead	to	the	compromising	of	sensitive,	confidential	or	personal	data	or	information,	improper	use	of	our	systems,	software	solutions	or	networks, unauthorized	access,	use,	disclosure,	modification	or	destruction	of	information,	defective	products,	production	downtimes	and	operational	disruptions.	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	action.

Our	failure	to	comply	with	the	Foreign	Corrupt	Practices	Act	(FCPA)	and	other	similar	laws	could	have	a	negative	impact	on	our	ongoing	operations.

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	agents	and	business	partners,	and	supervise,	train	and	retain	competent employees.	Our	compliance	program	depends	on	the	efforts	of	our	employees	to	comply	with	applicable	law	and	our	internal	policies.	We	could	be subject	to	sanctions	and	civil	and	criminal	prosecution,	as	well	as	fines	and	penalties,	in	the	event	of	a	finding	of	a	violation	of	any	of	these	laws	by	us	or any	of	our	employees.

# Anti-money	laundering	and	anti-terrorism	financing	laws	could	have	significant	adverse	consequences	for	us.

We	maintain	an	enterprise-wide	program	designed	to	enable	us	to	comply	with	all	applicable	anti-money	laundering	and	anti-terrorism	financing	laws and	regulations,	including	the	Bank	Secrecy	Act	and	the	Patriot	Act.	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	and geographic	locale.	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.	We	cannot	be	sure	our	programs	and	controls	are	or	will	remain	effective	to	ensure our	compliance	with	all	applicable	anti-money	laundering	and	anti-terrorism	financing	laws	and	regulations,	and	our	failure	to	comply	could	subject	us	to significant	sanctions,	fines,	penalties	and	reputational	harm,	all	of	which	could	have	a	material	adverse	effect	on	our	business,	results	of	operations	and financial	condition.

# Changes	in	tax	laws	or	tax	rates,	adverse	positions	taken	by	taxing	authorities	and	tax	audits	could	impact	operating	results.

Changes	in	tax	laws	or	tax	rates,	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.	In	addition,	we	may	periodically	restructure	our	legal	entity	organization.	If	taxing	authorities	were	to	disagree	with	our	tax	positions	in	connection with	any	such	restructurings,	our	effective	tax	rate	could	be	materially	impacted.	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.

# Our	operations	involve	a	variety	of	operating	hazards	and	risks	that	could	cause	losses.

The	products	that	we	manufacture	and	the	services	that	we	provide	are	complex,	and	the	failure	of	our	equipment	to	operate	properly	or	to	meet specifications	may	greatly	increase	our	customers'	costs.	In	addition,	many	of	these	products	are	used	in	inherently	hazardous	industries,	such	as	the offshore	oilfield	business.	These	hazards	include	blowouts,	explosions,	nuclear-related	events,	fires,	collisions,	capsizings	and	severe	weather conditions.	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.	We	may incur	substantial	liabilities	or	losses	as	a	result	of	these	hazards.	While	we	maintain	insurance	protection	against	some	of	these	risks,	and	seek	to	obtain indemnity	agreements	from	our	customers	requiring	the	customers	to	hold	us	harmless	from	some	of	these	risks,	our	insurance	and	contractual	indemnity protection	may	not	be	sufficient	or	effective	to	protect	us	under	all	circumstances	or	against	all	risks.	The	occurrence	of	a	significant	event,	against	which we	were	not	fully	insured	or	indemnified	or	the	failure	of	a	customer	to	meet	its	indemnification	obligations	to	us,	could	materially	and	adversely	affect	our results	of	operations	and	financial	condition.

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	and	our	business	are	impacted	by	material	changes	in	environmental	laws,	regulations,	rulings	and	litigation.	Our	expectations	regarding	our compliance	with	environmental	laws	and	regulations	and	our	expenditures	to	comply	with	environmental	laws	and	regulations,	including	(without limitation)	our	capital	expenditures	for	environmental	control	equipment,	are	only	our	forecasts	regarding	these	matters.	These	forecasts	may	be substantially	different	from	actual	results,	which	may	be	affected	by	factors	such	as:	changes	in	law	that	impose	restrictions	on	air	emissions,	wastewater management,	waste	disposal,	hydraulic	fracturing,	or	wetland	and	land	use	practices;	more	stringent	enforcement	of	existing	environmental	laws	and regulations;	a	change	in	our	share	of	any	remediation	costs	or	other	unexpected,	adverse	outcomes	with	respect	to	sites	where	we	have	been	named	as a	potentially	responsible	party,	including	(without	limitation)	Superfund	sites;	the	discovery	of	other	sites	where	additional	expenditures	may	be	required	to comply	with	environmental	legal	obligations;	and	the	accidental	discharge	of	hazardous	materials.

International,	national,	and	state	governments	and	agencies	continue	to	evaluate	and	promulgate	legislation	and	regulations	that	are	focused	on restricting	emissions	commonly	referred	to	as	greenhouse	gas	(GHG)	emissions.	In	the	United	States,	the	U.S.	Environmental	Protection	Agency	(EPA) has	taken	steps	to	regulate	GHG	emissions	as	air	pollutants	under	the	U.S.	Clean	Air	Act	of	1970,	as	amended.	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

our	wellsite	equipment	and	operations.	In	addition,	the	U.S.	government	has	proposed	rules	in	the	past	setting	GHG	emission	standards	for,	or	otherwise aimed	at	reducing	GHG	emissions	from,	the	oil	and	natural	gas	industry.	Caps	on	carbon	emissions,	including	in	the	United	States,	have	been	and	may continue	to	be	established	and	the	cost	of	such	caps	could	disproportionately	affect	the	fossil-fuel	energy	sector.	We	are	unable	to	predict	whether	the proposed	changes	in	laws	or	regulations	ultimately	will	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;	the	United	Kingdom's	CRC	Energy	Efficiency	and	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).

Current	or	future	legislation,	regulations	and	developments,	including	those	related	to	climate	change,	may	curtail	production	and	demand	for hydrocarbons	such	as	oil	and	natural	gas	in	areas	of	the	world	where	our	customers	operate,	by	shifting	demand	towards	relatively	lower	carbon	energy sources	such	as	wind,	solar	and	other	renewables.	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.

# Uninsured	claims	and	litigation	against	us	could	adversely	impact	our	operating	results.

We	could	be	impacted	by	the	outcome	of	pending	litigation,	as	well	as	unexpected	litigation	or	proceedings.	While	we	have	insurance	coverage against	operating	hazards,	including	product	liability	claims	and	personal	injury	claims	related	to	our	products,	to	the	extent	deemed	prudent	by	our management	and	to	the	extent	insurance	is	available;	no	assurance	can	be	given	that	the	nature	and	amount	of	that	insurance	will	be	sufficient	to	fully indemnify	us	against	liabilities	arising	out	of	pending	and	future	claims	and	litigation.	This	insurance	has	deductibles	or	self-insured	retentions	and contains	certain	coverage	exclusions.	The	insurance	does	not	cover	damages	from	breach	of	contract	by	us	or	based	on	alleged	fraud	or	deceptive	trade practices.	In	addition,	the	following	risks	apply	with	respect	to	our	insurance	coverage:

•we	may	not	be	able	to	continue	to	obtain	insurance	on	commercially	reasonable	terms;

•we	may	be	faced	with	types	of	liabilities	that	will	not	be	covered	by	our	insurance;

•our	insurance	carriers	may	not	be	able	to	meet	their	obligations	under	the	policies;	or

•the	dollar	amount	of	any	liabilities	may	exceed	our	policy	limits.

Control	of	oil	and	natural	gas	reserves	by	state-owned	oil	companies	may	impact	the	demand	for	our	services	and	products	and	create	additional	risks	in our	operations.

Much	of	the	world's	oil	and	natural	gas	reserves	are	controlled	by	state-owned	oil	companies.	State-owned	oil	companies	may	require	their contractors	to	meet	local	content	requirements	or	other	local	standards,	such	as	conducting	our	operations	through	joint	ventures	with	local	partners	that could	be	difficult	or	undesirable	for	us	to	meet.	The	failure	to	meet	the	local	content	requirements	and	other	local	standards	may	adversely	impact	our operations	in	those	countries.	In	addition,	our	ability	to	work	with	state-owned	oil	companies	is	subject	to	our	ability	to	negotiate	and	agree	upon acceptable	contract	terms.

# Providing	services	on	an	integrated	or	turnkey	basis	could	require	us	to	assume	additional	risks.

Many	state-owned	oil	companies	and	other	operators	may	require	integrated	contracts	or	turnkey	contracts	and	we	may	choose	to	provide	services outside	our	core	business.	Providing	services	on	an	integrated	or	turnkey	basis	may	subject	us	to	additional	risks,	such	as	costs	associated	with unexpected	delays	or	difficulties	in	drilling	or	completion	operations	and	risks	associated	with	subcontracting	arrangements.

# Some	of	our	customers	require	bids	in	the	form	of	long-term,	fixed	pricing	contracts.

Some	of	our	customers	require	bids	for	contracts	in	the	form	of	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.	These	customers	may	provide	us	with	inaccurate	information	in	relation	to	their	reserves.	The	estimation of	reserves	is	a	process	that	involves	subjective	judgment	about	likely	location	and	volume,	and	estimates	that	prove	inaccurate	may	result	in	cost	over- runs,	delays,	and	project	losses	for	us	or	our	customers,	which	may	adversely	impact	our	business.

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.

# The	credit	risks	of	having	a	concentrated	customer	base	in	the	energy	industry	could	result	in	losses.

Having	a	concentration	of	customers	in	the	energy	industry	may	impact	our	overall	exposure	to	credit	risk	as	our	customers	may	be	similarly	affected by	prolonged	changes	in	economic	and	industry	conditions.	Some	of	our	customers	may	experience	extreme	financial	distress	as	a	result	of	falling commodity	prices	and	may	be	forced	to	seek	protection	under	applicable	bankruptcy	laws,	which	may	affect	our	ability	to	recover	any	amounts	due	from such	customers.	Furthermore,	countries	that	rely	heavily	upon	income	from	hydrocarbon	exports	have	been	and	may	in	the	future	be	negatively	and significantly	affected	by	a	drop	in	oil	prices,	which	could	affect	our	ability	to	collect	from	our	customers	in	these	countries,	particularly	national	oil companies.	Laws	in	some	jurisdictions	in	which	we	will	operate	could	make	collection	difficult	or	time	consuming.	We	will	perform	ongoing	credit evaluations	of	our	customers	and	do	not	expect	to	require	collateral	in	support	of	our	trade	receivables.	While	we	maintain	reserves	for	potential	credit losses,	we	cannot	assure	such	reserves	will	be	sufficient	to	meet	write-offs	of	uncollectible	receivables	or	that	our	losses	from	such	receivables	will	be consistent	with	our	expectations.	Additionally,	in	the	event	of	a	bankruptcy	of	any	of	our	customers,	we	may	be	treated	as	an	unsecured	creditor	and	may collect	substantially	less,	or	none,	of	the	amounts	owed	to	us	by	such	customer.

# Our	backlog	is	subject	to	modification,	termination	or	reduction	of	orders,	which	could	negatively	impact	our	sales.

Our	backlog	is	comprised	of	unfilled	customer	orders	for	products	and	product	services	(expected	life	of	contract	sales	for	product	services).	Our backlog	can	be	significantly	affected	by	the	timing	of	orders	for	large	projects.	Although	modifications	and	terminations	of	orders	may	be	partially	offset	by cancellation	fees,	customers	can,	and	sometimes	do,	terminate	or	modify	orders.	Our	failure	to	replace	canceled	orders	could	negatively	impact	our	sales and	results	of	operations.	The	total	dollar	amount	of	the	Company's	backlog	as	of	December	31,	2017	was	$21,022	million.

We	may	not	be	able	to	satisfy	technical	requirements,	testing	requirements	or	other	specifications	required	under	our	service	contracts	and	equipment purchase	agreements.

Our	products	are	used	in	deepwater	and	other	harsh	environments	and	severe	service	applications.	Our	contracts	with	customers	and	customer requests	for	bids	typically	set	forth	detailed	specifications	or	technical	requirements	for	our	products	and	services,	which	may	also	include	extensive testing	requirements.	We	anticipate	that	such	testing	requirements	will	become	more	common	in	our	contracts.	In	addition,	recent	scrutiny	of	the	offshore drilling	industry	has	resulted	in	more	stringent	technical	specifications	for	our	products	and	more	comprehensive	testing	requirements	for	our	products	to ensure	compliance	with	such	specifications.	We	cannot	provide	assurance	that	our	products	will	be	able	to	satisfy	the	specifications	or	that	we	will	be able	to	perform	the	full-scale	testing	necessary	to	prove	that	the	product	specifications	are	satisfied	in	future	contract	bids	or	under	existing	contracts,	or that	the	costs	of	modifications	to	our	products	to	satisfy	the	specifications	and	testing	will	not	adversely	affect	our	results	of	operations.	If	our	products	are unable	to	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.

# Currency	fluctuations	or	devaluations	may	impact	our	operating	results.

Fluctuations	or	devaluations	in	foreign	currencies	relative	to	the	U.S.	dollar	can	impact	our	revenue	and	our	costs	of	doing	business,	as	well	as	the costs	of	doing	business	of	our	customers.	Most	of	our	products	and	services	are	sold	through	contracts	denominated	in	U.S.	dollars	or	local	currency indexed	to	U.S.	dollars,	however,	some	of	our	revenue,	local	expenses	and	manufacturing	costs	are	incurred	in	local	currencies	and	therefore	changes	in the	exchange	rates	between	the	U.S.	dollar	and	foreign	currencies	can	increase	or	decrease	our	revenue	and	expenses	reported	in	U.S.	dollars	or revenue	and	expenses	of	our	customers	and,	consequently,	may	impact	the	ability	of	our	customers	to	satisfy	their	payment	obligations	and	our	results	of operations.

# Changes	in	economic	and/or	market	conditions	may	impact	our	ability	to	borrow	and/or	cost	of	borrowing.

The	condition	of	the	capital	markets	and	equity	markets	in	general	can	affect	the	price	of	our	common	stock	and	our	ability	to	obtain	financing,	if necessary.	If	our	credit	rating	is	ever	downgraded,	it	could	increase	borrowing	costs	under	credit	facilities	and	commercial	paper	programs,	as	well	as increase	the	cost	of	renewing	or	obtaining,	or	make	it	more	difficult	to	renew,	obtain	or	issue	new	debt	financing.

# An	inability	to	protect	our	intellectual	property	rights	could	adversely	affect	our	business.

There	can	be	no	assurance	that	the	steps	we	take	to	obtain,	maintain	and	protect	our	intellectual	property	rights	will	be	completely	adequate.	Our intellectual	property	rights	may	fail	to	provide	us	with	significant	competitive	advantages,	particularly	in	foreign	jurisdictions	where	we	have	not	invested	in an	intellectual	property	portfolio	or	that	do	not	have,	or	do	not	enforce,	strong	intellectual	property	rights.	The	weakening	of	protection	of	our	trademarks, patents	and	other	intellectual	property	rights	could	also	adversely	affect	our	business.

We	are	a	party	to	a	number	of	licenses	that	give	us	rights	to	intellectual	property	that	is	necessary	or	useful	to	our	business,	including	from	GE following	the	Transactions.	Our	success	depends	in	part	on	the	ability	of	our	licensors	to	obtain,	maintain	and	sufficiently	enforce	the	licensed	intellectual property	rights	we	have	commercialized.	Without	protection	for	the	intellectual	property	rights	we	license,	other	companies	might	be	able	to	offer substantially	identical	products	for	sale,	which	could	adversely	affect	our	competitive	business	position	and	harm	our	business	products.	Also,	there	can be	no	assurances	that	we	will	be	able	to	obtain	or	renew	from	third	parties	the	licenses	to	use	intellectual	property	rights	we	need	in	the	future,	and	there is	no	assurance	that	such	licenses	can	be	obtained	on	reasonable	terms.	Specifically	we	are	a	party	to	several	agreements	with	GE	which	provide	for intellectual	property	rights	to	use	and	access.	Access	and	use	of	intellectual	property	created	solely	or	collaboratively	with	GE	is	an	important	part	of	our operations.	We	would	be	adversely	affected	in	the	event	these	agreements	were	terminated	without	the	right	to	continue	such	access	as	we	might continue	to	improve	current	products	and	services	or	develop	new	ones.

We	may	be	subject	to	litigation	if	another	party	claims	that	we	have	infringed	upon	its	intellectual	property	rights.

The	tools,	techniques,	methodologies,	programs	and	components	we	use	to	provide	our	products	and	services	may	infringe	upon	the	intellectual property	rights	of	others	or	be	challenged	on	that	basis.	Regardless	of	the	merits,	infringement	claims	may	result	in	significant	legal	and	other	costs	and may	distract	management	from	running	our	core	business.	Resolving	such	claims	could	increase	our	costs,	including	through	royalty	payments	to	acquire licenses,	if	available,	from	third	parties	and	through	the	development	of	non-infringing	technologies.	If	a	license	to	resolve	a	claim	were	not	available,	we might	not	be	able	to	continue	providing	a	particular	service	or	product,	which	could	adversely	affect	our	financial	condition,	results	of	operations	and	cash flows.

# Risk	Factors	Related	to	the	Worldwide	Oil	and	Natural	Gas	Industry

Volatility	of	oil	and	natural	gas	prices	can	adversely	affect	demand	for	our	products	and	services.

Prices	of	oil	and	gas	products	are	set	on	a	commodity	basis.	As	a	result,	the	volatility	in	oil	and	natural	gas	prices	can	impact	our	customers'	activity levels	and	spending	for	our	products	and	services.	Current	energy	prices	are	important	contributors	to	cash	flow	for	our	customers	and	their	ability	to	fund exploration	and	development	activities.	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.	Expectations	about	future	prices	and	price	volatility	are	important	for	determining future	spending	levels.

Lower	oil	and	natural	gas	prices	generally	lead	to	decreased	spending	by	our	customers.	While	higher	oil	and	natural	gas	prices	generally	lead	to increased	spending	by	our	customers,	sustained	high	energy	prices	can	be	an	impediment	to	economic	growth,	and	can	therefore	negatively	impact spending	by	our	customers.	Our	customers	also	take	into	account	the	volatility	of	energy	prices	and	other	risk	factors	by	requiring	higher	returns	for individual	projects	if	there	is	higher	perceived	risk.	Any	of	these	factors	could	affect	the	demand	for	oil	and	natural	gas	and	could	have	a	material	effect on	our	results	of	operations.

Demand	for	oil	and	natural	gas	is	subject	to	factors	beyond	our	control,	which	may	adversely	affect	our	operating	results.	Changes	in	the	global	economy could	impact	our	customers'	spending	levels	and	our	revenue	and	operating	results.

Demand	for	oil	and	natural	gas,	as	well	as	the	demand	for	our	services	and	products,	is	highly	correlated	with	global	economic	growth,	and	in particular	by	the	economic	growth	of	countries	such	as	the	U.S.,	India,	China,	and	developing	countries	in	Asia	and	the	Middle	East,	which	are	either significant	users	of	oil	and	natural	gas	or	whose	economies	are	experiencing	the	most	rapid	economic	growth	compared	to	the	global	average.	Weakness or	deterioration	of	the	global	economy	or	credit	markets	could	reduce	our	customers'	spending	levels	and	reduce	our	revenue	and	operating	results. Incremental	weakness	in	global	economic	activity,	particularly	in	China,	India,	Europe,	the	Middle	East	and	developing	countries	in	Asia,	could	reduce demand	for	oil	and	natural	gas	and	result	in	lower	oil	and	natural	gas	prices.	Incremental	strength	in	global	economic	activity	in	such	areas	will	create more	demand	for	oil	and	natural	gas	and	support	higher	oil	and	natural	gas	prices.	A	prolonged	reduction	in	oil	and	natural	gas	prices	may	require	us	to record	additional	asset	impairments.	Such	a	potential	impairment	charge	could	have	a	material	adverse	impact	on	our	operating	results.

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

International,	national,	and	state	governments,	agencies	and	bodies	continue	to	evaluate	and	promulgate	regulations	and	voluntary	initiatives	that	are focused	on	restricting	GHG	emissions.		These	requirements	and	initiatives	are	likely	to	become	more	stringent	over	time	and	to	result	in	increased	costs for	the	oil	and	gas	industry	to	curb	GHG	emissions.		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.		The renewable	energy	industry	is	developing	enhanced	technologies	and	becoming	more	competitive	with	fossil-fuel	energy.	If	renewable	energy	becomes more	competitive	than	fossil-fuel	energy,	particularly	during	periods	of	higher	oil	and	natural	gas	prices,	it	could	have	a	material	effect	on	our	results	of operations.	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."

Supply	of	oil	and	natural	gas	is	subject	to	factors	beyond	our	control,	which	may	adversely	affect	our	operating	results.

Productive	capacity	for	oil	and	natural	gas	is	dependent	on	our	customers'	decisions	to	develop	and	produce	oil	and	natural	gas	reserves	and	on	the regulatory	environment	in	which	our	customers	and	we	operate.	The	ability	to	produce	oil	and	natural	gas	can	be	affected	by	the	number	and	productivity of	new	wells	drilled	and	completed,	as	well	as	the	rate	of	production	and	resulting	depletion	of	existing	wells.	Advanced	technologies,	such	as	horizontal drilling	and	hydraulic	fracturing,	improve	total	recovery	but	also	result	in	a	more	rapid	production	decline	and	may	become	subject	to	more	stringent regulation,	particularly	on	the	state	or	local	level,	in	the	future.

Productive	capacity	in	excess	of	demand	("spare	productive	capacity")	is	also	an	important	factor	influencing	energy	prices	and	spending	by	oil	and natural	gas	exploration	companies.	Spare	productive	capacity	and	oil	and	natural	gas	storage	inventory	levels	are	an	indicator	of	the	relative	balance between	supply	and	demand.	High	or	increasing	storage,	inventories,	or	spare	productive	capacity	generally	indicate	that	supply	is	exceeding	demand and	that	energy	prices	are	likely	to	soften.	Low	or	decreasing	storage,	inventories,	or	spare	productive	capacity	are	generally	an	indicator	that	demand	is growing	faster	than	supply	and	that	energy	prices	are	likely	to	rise.

Access	to	prospects	is	also	important	to	our	customers,	but	such	access	may	be	limited	because	host	governments	do	not	allow	access	to	the reserves.	Government	regulations	and	the	costs	incurred	by	oil	and	natural	gas	exploration	companies	to	conform	to	and	comply	with	government regulations	may	also	limit	the	quantity	of	oil	and	natural	gas	that	may	be	economically	produced.

Supply	can	also	be	impacted	by	the	degree	to	which	individual	OPEC	nations	and	other	large	oil	and	natural	gas	producing	countries,	including,	but not	limited	to,	Norway	and	Russia,	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.	Any	of	these	factors	could	affect	the	supply	of	oil	and	natural	gas	and	could	have	a	material effect	on	our	results	of	operations.

Our	customers'	activity	levels	and	spending	for	our	products	and	services	and	ability	to	pay	amounts	owed	us	could	be	impacted	by	the	reduction	of	their cash	flow	and	the	ability	of	our	customers	to	access	equity	or	credit	markets.

Our	customers'	access	to	capital	is	dependent	on	their	ability	to	access	the	funds	necessary	to	develop	economically	attractive	projects	based	upon their	expectations	of	future	energy	prices,	required	investments	and	resulting	returns.	Limited	access	to	external	sources	of	funding	has	caused	and	may continue	to	cause	customers	to	reduce	their	capital	spending	plans	to	levels	supported	by	internally	generated	cash	flow.	In	addition,	a	reduction	of	cash flow	resulting	from	declines	in	commodity	prices,	a	reduction	in	borrowing	bases	under	reserve-based	credit	facilities	or	the	lack	of	available	debt	or equity	financing	may	impact	the	ability	of	our	customers	to	pay	amounts	owed	to	us	and	could	cause	us	to	increase	our	reserve	for	doubtful	accounts.

# Seasonal	and	weather	conditions	could	adversely	affect	demand	for	our	services	and	operations.

Variation	from	normal	weather	patterns,	such	as	cooler	or	warmer	summers	and	winters,	can	have	a	significant	impact	on	demand	for	our	services and	operations.	Adverse	weather	conditions,	such	as	hurricanes	in	the	Gulf	of	Mexico,	may	interrupt	or	curtail	our	operations,	or	our	customers' operations,	cause	supply	disruptions	and	result	in	a	loss	of	revenue	and	damage	to	our	equipment	and	facilities,	which	may	or	may	not	be	insured.	For example,	extreme	winter	conditions	in	Canada,	Russia	or	the	North	Sea	may	interrupt	or	curtail	our	operations,	or	our	customers'	operations,	in	those areas	and	result	in	a	loss	of	revenue.

# Risk	Factors	Related	to	the	Transactions

We	may	experience	challenges	relating	to	the	ongoing	integration	of	Baker	Hughes	Incorporated	and	GE	O&G	that	may	result	in	a	decline	in	the anticipated	benefits	of	the	Transactions.

The	Transactions	involved	the	combination	of	two	businesses	that	previously	operated	as	independent	businesses.	The	Company	has	been	and	will continue	to	be	required	to	devote	management	attention	and	resources	to	integrating	its	business	practices	and	operations.

If	we	experience	difficulties	with	the	integration	process,	the	anticipated	benefits	of	the	Transactions	may	not	be	realized	fully	or	at	all,	may	take longer	to	realize	than	expected,	or	be	offset	by	the	decrease	in	business	from	certain	customers.	These	integration	matters	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	transaction-related	and	restructuring	costs	in	connection	with	the	Transactions	and	the	integration	of	the	two businesses.

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.	There	are	many	systems	that	must	be	successfully	integrated, including	information	management,	purchasing,	accounting	and	finance,	sales,	billing,	payroll	and	benefits,	fixed	asset	and	lease	administration	systems and	regulatory	compliance.	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.

We	are	a	"controlled	company"	within	the	meaning	of	the	NYSE	rules	and,	as	a	result,	qualify	for,	and	are	relying	on,	exemptions	from	certain	corporate governance	requirements.	As	a	result,	our	stockholders	do	not	have	the	same	protections	afforded	to	stockholders	of	companies	that	are	subject	to	such requirements.	The	interests	of	GE	as	a	controlling	stockholder	may	differ	from	the	interests	of	other	stockholders	of	the	Company.

Through	its	ownership	of	a	majority	of	the	Company's	voting	power	and	the	provisions	set	forth	in	the	Company	Charter,	the	Company	Bylaws	and the	Stockholders	Agreement,	GE	has	the	ability	to	designate	and	elect	a	majority	of	the	Company's	directors.	As	a	result	of	GE's	ownership	of	a	majority of	the	voting	power	of	common	stock,	the	Company	is	a	"controlled	company"	as	defined	in	NYSE	listing	rules	and,	therefore,	is	not	subject	to	NYSE requirements	that	would	otherwise	require	the	Company	to	have	(i)	a	majority	of	independent	directors,	(ii)	a	nominating	committee	composed	solely	of independent	directors,	(iii)	the	compensation	of	its	executive	officers	determined	by	a	majority	of	the	independent	directors	or	a	compensation	committee composed	solely	of	independent	directors,	and	(iv)	director	nominees	selected,	or	recommended	for	the	board's	selection,	either	by	a	majority	of	the independent	directors	or	a	nominating	committee	composed	solely	of	independent	directors.	Under	the	Stockholders	Agreement,	our	Board	will	generally have	four	directors	not	designated	by	GE	and	five	directors	designated	by	GE.

GE	also	has	control	over	certain	matters	submitted	to	stockholders	for	approval,	including	changes	in	capital	structure,	transactions	requiring stockholder	approval	under	Delaware	law	and	corporate	governance,	subject	to	the	terms	of	the	Stockholders	Agreement	relating	to	GE's	agreement	to vote	in	favor	of	director	nominees	not	designated	by	GE	and	to	proposals	by	GE	to	acquire	all	of	the	shares	of	common	stock	held	by	non- GE	stockholders.	GE	may	have	different	interests	than	other	holders	of	Class	A	common	stock.

Among	other	things,	GE's	control	could	delay,	defer,	or	prevent	a	sale	of	the	Company	that	the	Company's	other	stockholders	support,	or, conversely,	this	control	could	result	in	the	consummation	of	such	a	transaction	that	other	stockholders	do	not	support.	This	concentrated	control	could discourage	a	potential	investor	from	seeking	to	acquire	Class	A	common	stock	and,	as	a	result,	might	harm	the	market	price	of	that	Class	A	common stock.

Given	GE's	ownership	of	the	majority	of	the	outstanding	voting	securities	of	the	Company	and	the	interactions	that	have	and	will	take	place	between the	Company	and	GE	through	the	GE	Store	and	otherwise,	the	success	of	the	Company	depends	in	part	on	the	reputation	and	success	of	GE.

If	we	were	to	cease	being	a	majority-owned	subsidiary	of	GE	in	the	future,	such	a	separation	could	adversely	affect	our	business	and	profitability. Uncertainty	about	the	likelihood	of	any	such	separation	could	also	adversely	affect	our	business,	financial	condition	and	results	of	operations.

As	a	subsidiary	of	GE,	we	market	many	of	our	products	and	services	using	the	"GE"	brand	name	and	logo.	We	believe	that	the	association	with	GE provides	many	benefits,	including:	a	strong	brand,	broad	research	and	development	capabilities,	elevated	status	with	suppliers	and	customers,	and established	relationships	with	regulators.

Although	GE	has	licensed	to	us	the	right	to	use	certain	"GE"	marks	in	its	corporate	name	and	in	the	products	and	services	of	our	business	in connection	with	certain	oil	and	gas	activities	and	other	discrete	oil	and	gas	segments,	that	right	to	use	these	marks	would	be	lost	if	the	license	were	to expire	or	otherwise	terminate.

In	addition,	if	we	were	to	cease	being	a	majority-owned	subsidiary	of	GE,	or	there	were	otherwise	a	meaningful	change	in	the	relationships	between GE	and	the	Company,	such	an	event(s)	could	adversely	affect,	among	other	things,	our	ability	to	attract	and	retain	customers.	Among	other	things,	we may	be	required	to	provide	more	favorable	pricing	and	other	terms	to	our	customers	and	take	other	action	to	maintain	our	relationship	with	existing,	and attract	new,	customers,	all	of	which	could	have	a	material	adverse	effect	on	our	business,	financial	condition	and	results	of	operations.	For	example, although	GE	would	be	subject	to	certain	non-compete	restrictions	for	a	period	of	time	following	the	Company	no	longer	being	a	majority-owned	subsidiary of	GE,	in	the	absence	of	an	agreement	regulating	the	go-to-market	strategy	and	the	reciprocal	commercial	and	technical	support	between	GE	and	the Company,	GE	may	attempt	to	compete	with	us	with	respect	to	certain	technologies	and	customer	projects	where	we	have	adjacent	or	overlapping presence	(e.g.,	steam	turbines	and	gas	turbines).		Furthermore,	we	may

lose	cost	synergies,	joint	investment	and	R&D	opportunities,	and	access	to	customers,	in	fields	where	we	and	GE	currently	collaborate	as	per	the	terms	of the	Channel	Agreement	(e.g.	additive	manufacturing;	digital).

# ITEM	1B.	UNRESOLVED	STAFF	COMMENTS

None.

# ITEM	2.	PROPERTIES

We	own	or	lease	numerous	properties	throughout	the	world.	We	consider	our	manufacturing	plants,	equipment	assembly,	maintenance	and	overhaul facilities,	grinding	plants,	drilling	fluids	and	chemical	processing	centers,	and	primary	research	and	technology	centers	to	be	our	principal	properties.	The following	sets	forth	the	location	of	our	principal	owned	or	leased	facilities	for	our	business	segments	as	of	December	31,	2017:

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;	Luanda,	Angola;	Port	Harcourt,	Nigeria

We	own	or	lease	numerous	other	facilities	such	as	service	centers,	blend	plants,	workshops	and	sales	and	administrative	offices	throughout	the geographic	regions	in	which	we	operate.	We	also	have	a	significant	investment	in	service	vehicles,	tools	and	manufacturing	and	other	equipment.	All	of our	owned	properties	are	unencumbered.	We	believe	that	our	facilities	are	well	maintained	and	suitable	for	their	intended	purposes.

# ITEM	3.	LEGAL	PROCEEDINGS

The	information	with	respect	to	Item	3.	Legal	Proceedings	is	contained	in	"Note	17.	Commitment	and	Contingencies"	of	the	Notes	to	Consolidated Financial	Statements	in	Item	8	herein.

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.

# ITEM	4.	MINE	SAFETY	DISCLOSURES

Our	barite	mining	operations,	in	support	of	our	drilling	fluids	products	and	services	business,	are	subject	to	regulation	by	the	federal	Mine	Safety	and Health	Administration	under	the	Federal	Mine	Safety	and	Health	Act	of	1977.	We	have	no	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	to	report	for	2017.

# PART	II

# ITEM	5.	MARKET	FOR	REGISTRANT'S	COMMON	EQUITY,	RELATED	STOCKHOLDER	MATTERS	AND	ISSUER	PURCHASES	OF	EQUITY

# SECURITIES

Our	Class	A	common	stock,	$0.0001	par	value	per	share,	is	traded	on	the	New	York	Stock	Exchange.	As	of	February	8,	2018,	there	were approximately	6,853	stockholders	of	record.	All	of	our	issued	and	outstanding	Class	B	common	stock,	$0.0001	par	value	per	share,	is	owned	by	GE.

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.

The	following	table	contains	information	about	our	purchases	of	Class	A	common	stock	equity	securities	during	the	fourth	quarter	of 2017.

# Issuer	Purchases	of	Equity	Securities

| Period | Total	Number<br>of	Shares<br>Purchased	(1) | Average<br>Price	Paid<br>Per	Share	(2) | Total	Number	of<br>Shares	Purchased	as<br>Part	of	a	Publicly<br>Announced	Plan	or	Programs	(3) | Maximum	Dollar	Value<br>of	Shares	that	May	Yet	Be<br>Purchased	Under	the	Plan	or<br>Programs	(4) |
| :--- | :--- | :--- | :--- | :--- |
| October\t1-31,\t2017 | 10,121 | $36.64 | — | $— |
| November\t1-30,\t2017 | 1,761,106 | 30.46 | 1,759,086 | $1,071,428,624 |
| December\t1-31,\t2017 | 4,289,714 | 31.24 | 4,287,649 | $937,500,428 |
| Total | 6,060,941 | $31.02 | 6,046,735 |  |

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

(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	units	and	shares	purchased	in	the	open	market	under	our	publicly	announced	purchase	program,	which	includes	commissions.

(3) On	November	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	this	repurchase	are	to	be	used	by	BHGE	to	repurchase	Class	A	common	stock	of	the	Company	on	the	open	market,	which	if	fully	implemented would	result	in	the	repurchase	of	approximately	$1.1	billion	of	Class	A	common	stock.	The	Class	B	common	stock	of	the	Company,	that	is	paired	with repurchased	common	units,	was	repurchased	by	the	Company	at	par	value.	BHGE	LLC	had	authorization	remaining	to	repurchase	up	to	approximately	$2.5 billion	of	its	common	units	from	BHGE	and	GE	at	December	31,	2017.

(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.

# Corporate	Performance	Graph

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	("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,	2012	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,	2017.

# Comparison	of	Four	Years	and	Six	Months	Cumulative	Total	Return

# Baker	Hughes	Incorporated;	S&P	500	Index	and	S&P	500	Oil	and	Gas	Equipment	and	Services	Index

# corpgraph5.jpg

|  | 2012 | 2013 | 2014 | 2015 | 2016 | July	3,<br>2017 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Baker\tHughes\tIncorporated | $100.00 | $136.96 | $140.44 | $116.93 | $166.99 | $149.09 |
| S&amp;P\t500\tIndex | 100.00 | 132.39 | 150.51 | 152.59 | 170.84 | 187.24 |
| S&amp;P\t500\tOil\tand\tGas\tEquipment\tand\tServices\tIndex | 100.00 | 130.65 | 120.46 | 97.87 | 129.12 | 151.59 |

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	Standard	&	Poor's	("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	6-months	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,	2017.

# Comparison	of	Six	Months	Cumulative	Total	Return

# BHGE;	S&P	500	Index	and	S&P	500	Oil	and	Gas	Equipment	and	Services	Index

# corpgrapha02.jpg

|  | July	5,	2017 | December	31,	2017 |
| :--- | :--- | :--- |
| BHGE | $100.00 | $85.84 |
| S&amp;P\t500\tIndex | 100.00 | 110.97 |
| S&amp;P\t500\tOil\tand\tGas\tEquipment\tand\tServices\tIndex | 100.00 | 106.02 |

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

The	corporate	performance	graph	and	related	information	shall	not	be	deemed	"soliciting	material"	or	to	be	"filed"	with	the	SEC,	nor	shall	such information	be	incorporated	by	reference	into	any	future	filing	under	the	Securities	Act	or	the	Exchange	Act,	except	to	the	extent	that	BHGE	specifically incorporates	it	by	reference	into	such	filing.

# ITEM	6.	SELECTED	FINANCIAL	DATA

The	Selected	Financial	Data	should	be	read	in	conjunction	with	Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of Operations	and	Item	8.	Financial	Statements	and	Supplementary	Data,	both	contained	herein.

|  |  | Year	Ended	December	31, | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- | :--- |
| (In\tmillions,\texcept\tper\tshare\tamounts) | 2017\t(1) | 2016 | 2015 | 2014 |
| Revenue | $17,259 | $13,269 | $16,688 | $19,191 |
| Cost\tof\trevenue | 14,046 | 10,123 | 12,193 | 14,256 |
| Selling,\tgeneral\tand\tadministrative | 2,535 | 1,938 | 2,115 | 2,288 |
| Restructuring,\timpairment\tand\tother\t (2) | 412 | 516 | 411 | 189 |
| Goodwill\timpairment\t(3) | — | — | 2,080 | — |
| Merger\tand\trelated\tcosts\t (4) | 373 | 33 | 27 | 67 |
| Operating\tincome\t(loss) | (107) | 659 | (138) | 2,391 |
| Other\tnon\toperating\tincome,\tnet | 78 | 27 | 100 | 124 |
| Interest\texpense,\tnet |  |  |  |  |
|  | (131) | (102) | (120) | (179) |
| Income\t(loss)\tbefore\tincome\ttaxes\tand\tequity\tin\tloss\tof\taffiliate | (160) | 584 | (158) | 2,336 |
| Equity\tin\tloss\tof\taffiliate | (11) | — | — | — |
| Income\ttax\tprovision | (71) | (250) | (473) | (484) |
| Net\tincome\t(loss) | (242) | 334 | (631) | 1,852 |
| Less:\tNet\tincome\t(loss)\tattributable\tto\tGE\tO&amp;G\tpre-merger | 109 | 403 | (606) | 1,840 |
| Less:\tNet\tincome\t(loss)\tattributable\tto\tnoncontrolling\tinterests | (278) | (69) | (25) | 12 |
| Net\tloss\tattributable\tto\tBaker\tHughes,\ta\tGE\tcompany | $(73) | $— | $— | $— |
| Per\tshare\tof\tcommon\tstock: |  |  |  |  |
| Basic\tand\tdiluted\tloss\tper\tClass\tA\tcommon\tshare | $(0.17) |  |  |  |
| Dividend: |  |  |  |  |
| Cash\tdividend\tper\tClass\tA\tcommon\tshare | 0.35 |  |  |  |
| Special\tdividend\tper\tClass\tA\tcommon\tshare | 17.50 |  |  |  |
| Balance\tSheet\tData: |  |  |  |  |
| Cash\tand\tequivalents\t(5) | $7,023 | $981 | $1,432 | $1,390 |
| Total\tassets | 57,050 | 21,721 | 23,133 | 26,496 |
| Long-term\tdebt | 6,312 | 38 | 13 | 14 |
| Total\tequity | 39,173 | 14,855 | 14,545 | 16,386 |

# Notes	to	Selected	Financial	Data

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

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

(3) Goodwill	impairment	recognized	in	our	OFS	operating	segment.	See	"Note	6.	Goodwill	and	Intangible	Assets"	of	the	Notes	to	Consolidated	and	Combined	Financial Statements	in	Item	8	herein	for	further	discussion.

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

(5) Cash	and	equivalents	includes	$997	million	of	cash	held	on	behalf	of	GE	at	December	31, 2017.

# ITEM	7.	MANAGEMENT'S	DISCUSSION	AND	ANALYSIS	OF	FINANCIAL	CONDITION	AND	RESULTS	OF	OPERATIONS

Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	("MD&A")	should	be	read	in	conjunction	with	the	condensed consolidated	and	combined	financial	statements	included	in	Item	8.	Financial	Statements	and	Supplementary	Data	contained	herein.

# EXECUTIVE	SUMMARY

On	July	3,	2017,	we	closed	the	Transactions	to	combine	GE	O&G	and	Baker	Hughes,	creating	a	fullstream	oilfield	technology	provider	that	has	a unique	mix	of	integrated	oilfield	products,	services	and	digital	solutions.	As	a	result	of	the	Transactions,	BHGE	became	the	holding	company	of	the combined	businesses.	The	Transactions	were	executed	using	a	partnership	structure,	pursuant	to	which	GE	O&G	and	Baker	Hughes	each	contributed their	operating	assets	to	a	newly	formed	partnership,	BHGE	LLC.	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.	The	results	of	operations for	the	Company	include	the	results	of	Baker	Hughes	from	July	3,	2017,	the	date	of	acquisition,	through	December	31,	2017.	The	majority	of	the	Baker Hughes	business	operations	are	included	in	the	Oilfield	Services	segment.	The	Transactions	were	treated	as	a	"reverse	acquisition"	for	accounting purposes	and,	as	such,	the	historical	financial	statements	of	the	accounting	acquirer,	GE	O&G,	are	the	historical	financial	statements	of	the	Company. The	current	year	results,	and	balances,	may	not	be	comparable	to	prior	years	as	the	current	year	includes	the	results	of	Baker	Hughes	from	July	3,	2017. We	operate	through	our	four	business	segments:	Oilfield	Services	(OFS),	Oilfield	Equipment	(OFE),	Turbomachinery	&	Processing	Solutions	(TPS),	and Digital	Solutions	(DS).	As	of	December	31,	2017,	BHGE	employs	over	64,000	employees	and	operates	in	more	than	120	countries.

In	2017,	we	generated	revenue	of	$17,259	million,	compared	to	$13,269	million	in	2016.	The	increase	in	revenue	was	driven	primarily	by	OFS	as	a result	of	the	acquisition	of	Baker	Hughes,	and	to	a	lesser	extent,	by	DS	partially	offset	by	declines	in	TPS	and	OFE.	Loss	before	income	taxes	and	equity in	loss	of	affiliate	was	$160	million	in	2017,	and	included	restructuring	and	impairment	charges	of	$412	million	and	merger	and	related	costs	of	 $373 million.	These	restructuring	and	impairment	charges	were	recorded	as	a	result	of	our	continued	actions	to	adjust	our	operations	and	cost	structure	to reflect	reduced	activity	levels.	In	2016,	income	before	income	taxes	and	equity	in	loss	of	affiliate	was	$584	million,	which	also	included	restructuring	and impairment	charges	of	$516	million,	and	merger	and	related	costs	of	 $33	million.

# OUTLOOK

Our	business	is	exposed	to	a	number	of	different	macro	factors,	which	influence	our	expectations	and	outlook.	All	of	our	outlook	expectations	are purely	based	on	the	market	as	we	see	it	today,	and	are	subject	to	change	given	volatile	conditions	in	the	industry.

•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.

•International	onshore	activity:	we	have	seen	a	moderate	increase	in	rig	count	activity	in	2017	and	expect	growth	to	continue	into	2018,	at	a moderate	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.

•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.

•Refinery,	petrochemical	and	industrial	projects:	in	refining,	we	believe	large,	complex	refineries	should	gain	advantage	in	a	more	competitive, oversupplied	landscape	in	2018	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	2018.	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	2018.

We	have	other	segments	in	our	portfolio	that	are	more	correlated	with	different	industrial	metrics	such	as	our	Digital	Solutions	business.	Overall,	we believe	our	portfolio	is	uniquely	positioned	to	compete	across	the	value	chain,	and	deliver	unique	solutions	for	our	customers.	We	remain	optimistic	about the	long-term	economics	of	the	industry,	but	are	continuing	to	operate	with	flexibility	given	our	expectations	for	volatility	and	changing	assumptions	in	the near	term.

In	2016,	solar	and	wind	net	additions	exceeded	coal	and	gas	for	the	first	time	and	it	continued	throughout	2017.		Governments	may	change	or	may not	continue	incentives	for	renewable	energy	additions.		In	the	long	term,	renewables'	cost	decline	may	accelerate	to	compete	with	new-built	fossil capacity,	however,	we	do	not	anticipate	any	significant	impacts	to	our	business	in	the	foreseeable	future.

Despite	the	near-term	volatility,	the	long-term	outlook	for	our	industry	remains	strong.	We	believe	the	world's	demand	for	energy	will	continue	to	rise, and	the	supply	of	energy	will	continue	to	increase	in	complexity,	requiring	greater	service	intensity	and	more	advanced	technology	from	oilfield	service companies.	As	such,	we	remain	focused	on	delivering	innovative	cost-efficient	solutions	that	deliver	step	changes	in	operating	and	economic performance	for	our	customers.

# BUSINESS	ENVIRONMENT

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,	2017,	2016	and	2015,	and	should	be	read	in	conjunction	with	the	consolidated	and	combined	financial statements	and	related	notes	of	the	Company.	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.

We	operate	in	more	than	120	countries	helping	customers	find,	evaluate,	drill,	produce,	transport	and	process	hydrocarbon	resources.	Our	revenue is	predominately	generated	from	the	sale	of	products	and	services	to	major,	national,	and	independent	oil	and	natural	gas	companies	worldwide,	and	is dependent	on	spending	by	our	customers	for	oil	and	natural	gas	exploration,	field	development	and	production.	This	spending	is	driven	by	a	number	of factors,	including	our	customers'	forecasts	of	future	energy	demand	and	supply,	their	access	to	resources	to	develop	and	produce	oil	and	natural	gas, their	ability	to	fund	their	capital	programs,	the	impact	of	new	government	regulations	and	most	importantly,	their	expectations	for	oil	and	natural	gas prices	as	a	key	driver	of	their	cash	flows.

# Oil	and	Natural	Gas	Prices

Oil	and	natural	gas	prices	are	summarized	in	the	table	below	as	averages	of	the	daily	closing	prices	during	each	of	the	periods	indicated.

|  | 2017 | 2016 | 2015 |
| :--- | :--- | :--- | :--- |
| Brent\toil\tprices\t($/Bbl)\t (1) | $54.12 | $43.64 | $52.32 |
| WTI\toil\tprices\t($/Bbl)\t (2) | 50.80 | 43.29 | 48.66 |
| Natural\tgas\tprices\t($/mmBtu)\t^(3) | 2.99 | 2.52 | 2.62 |

(1) Energy	Information	Administration	(EIA)	Europe	Brent	Spot	Price	per

Barrel

# (2) EIA	Cushing,	OK	WTI	(West	Texas	Intermediate)	spot

price

(3) EIA	Henry	Hub	Natural	Gas	Spot	Price	per	million	British	Thermal

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.

In	North	America,	customer	spending	is	highly	driven	by	WTI	oil	prices,	which,	similar	to	Brent	oil	prices,	fluctuated	significantly	throughout	the	year, with	the	highest	prices	being	recorded	towards	the	end	of	the	year.	Overall,	WTI	oil	prices	ranged	from	a	low	of	$42.48/Bbl	in	June	2017	to	a	high	of $60.46/Bbl	in	December	2017.

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.

In	North	America,	natural	gas	prices,	as	measured	by	the	Henry	Hub	Natural	Gas	Spot	Price,	averaged	$2.99	/mmBtu	in	2017,	representing	a	19% increase	over	the	prior	year.	Throughout	the	year,	Henry	Hub	Natural	Gas	Spot	Prices	ranged	from	a	high	of	$3.71	/mmBtu	in	January	2017	to	a	low	of $2.44	/mmBtu	in	February	2017.	According	to	the	U.S.	Department	of	Energy	("DOE"),	working	natural	gas	in	storage	at	the	end	of	2017	was	3,126	billion cubic	feet	("Bcf"),	which	was	5.6%,	or	185	Bcf,	below	the	corresponding	week	in	2016.

# Baker	Hughes	Rig	Count

The	Baker	Hughes	rig	counts	are	an	important	business	barometer	for	the	drilling	industry	and	its	suppliers.	When	drilling	rigs	are	active	they consume	products	and	services	produced	by	the	oil	service	industry.	Rig	count	trends	are	driven	by	the	exploration	and	development	spending	by	oil	and natural	gas	companies,	which	in	turn	is	influenced	by	current	and	future	price	expectations	for	oil	and	natural	gas.	The	counts	may	reflect	the	relative strength	and	stability	of	energy	prices	and	overall	market	activity,	however,	these	counts	should	not	be	solely	relied	on	as	other	specific	and	pervasive conditions	may	exist	that	affect	overall	energy	prices	and	market	activity.

We	have	been	providing	rig	counts	to	the	public	since	1944.	We	gather	all	relevant	data	through	our	field	service	personnel,	who	obtain	the necessary	data	from	routine	visits	to	the	various	rigs,	customers,	contractors	and	other	outside	sources	as	necessary.	We	base	the	classification	of	a	well as	either	oil	or	natural	gas	primarily	upon	filings	made	by	operators	in	the	relevant	jurisdiction.	This	data	is	then	compiled	and	distributed	to	various	wire services	and	trade	associations	and	is	published	on	our	website.	We	believe	the	counting	process	and	resulting	data	is	reliable,	however,	it	is	subject	to our	ability	to	obtain	accurate	and	timely	information.	Rig	counts	are	compiled	weekly	for	the	U.S.	and	Canada	and	monthly	for	all	international	rigs. Published	international	rig	counts	do	not	include	rigs	drilling	in	certain	locations,	such	as	Russia,	the	Caspian	region,	Iran	and	onshore	China	because this	information	is	not	readily	available.

Rigs	in	the	U.S.	and	Canada	are	counted	as	active	if,	on	the	day	the	count	is	taken,	the	well	being	drilled	has	been	started	but	drilling	has	not	been completed	and	the	well	is	anticipated	to	be	of	sufficient	depth	to	be	a	potential	consumer	of	our	drill	bits.	In	international	areas,	rigs	are	counted	on	a weekly	basis	and	deemed	active	if	drilling	activities	occurred	during	the	majority	of	the	week.	The	weekly	results	are	then	averaged	for	the	month	and published	accordingly.	The	rig	count	does	not	include	rigs	that	are	in	transit	from	one	location	to	another,	rigging	up,	being	used	in	non-drilling	activities including	production	testing,	completion	and	workover,	and	are	not	expected	to	be	significant	consumers	of	drill	bits.

# The	rig	counts	are	summarized	in	the	table	below	as	averages	for	each	of	the	periods	indicated.

|  | 2017 | 2016 | 2015 |
| :--- | :--- | :--- | :--- |
| North\tAmerica | 1,082 | 642 | 1,178 |
| International | 948 | 956 | 1,168 |
| Worldwide | 2,030 | 1,598 | 2,346 |

Overall	the	rig	count	was	2,030	in	2017,	an	increase	of	27%	as	compared	to	2016	due	primarily	to	North	American	activity.	The	rig	count	in	North America	increased	69%	in	2017	compared	to	2016.	Internationally,	the	rig	count	decreased	1%	in	2017	as	compared	to	the	same	period	last	year.

Within	North	America,	the	increase	was	primarily	driven	by	the	land	rig	count,	which	was	up	72%,	partially	offset	by	a	decrease	in	the	offshore	rig count	of	16%.	Internationally,	the	rig	count	decrease	was	driven	primarily	by	decreases	in	Latin	America	of	7%,	the	Europe	region	and	Africa	region, which	were	down	by	4%	and	2%,	respectively,	partially	offset	by	the	Asia-Pacific	region,	which	was	up	8%.

Overall	the	rig	count	was	1,598	in	2016,	a	decrease	of	32%	as	compared	to	2015	due	primarily	to	North	American	activity.	The	rig	count	in	North America	decreased	46%	in	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.	Internationally,	the	rig	count	decrease	was	driven	primarily	by	decreases	in	Latin America,	which	was	down	38%,	the	Africa	region,	which	was	down	20%,	and	the	Europe	region	and	Asia-Pacific	region,	which	were	down	18%	and	15%, respectively.

# 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.

Orders:	In	2017,	we	recognized	orders	of	$17,376	million,	an	increase	of	$6,103	million,	or	54%,	from	2016.	The	increase	in	orders	was	driven primarily	by	the	acquisition	of	Baker	Hughes.	Service	orders	were	up	38%	and	equipment	orders	were	up	87%.

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.

Backlog:	As	of	December	31,	2017,	backlog	was	$21,022	million,	a	decrease	of	$675	million,	or	3%,	from	2016.	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.

# RESULTS	OF	OPERATIONS

The	discussions	below	relating	to	significant	line	items	from	our	consolidated	and	combined	statements	of	income	(loss)	are	based	on	available information	and	represent	our	analysis	of	significant	changes	or	events	that	impact	the	comparability	of	reported	amounts.	Where	appropriate,	we	have identified	specific	events	and	changes	that	affect	comparability	or	trends	and,	where	reasonably	practicable,	have	quantified	the	impact	of	such	items.	In addition,	the	discussions	below	for	revenue	and	cost	of	revenue	are	on	a	total	basis	as	the	business	drivers	for	product	sales	and	services	are	similar.	All dollar	amounts	in	tabulations	in	this	section	are	in	millions	of	dollars,	unless	otherwise	stated.	Certain	columns	and	rows	may	not	add	due	to	the	use	of rounded	numbers.

The	results	of	operations	for	the	Company	include	the	results	of	Baker	Hughes	from	July	3,	2017,	the	date	of	acquisition,	through	the	end	of	the	year ended	December	31,	2017.	Our	results	of	operations	are	evaluated	by	the	Chief	Executive	Officer	on	a	combined	and	consolidated	basis	as	well	as	at the	segment	level.

The	performance	of	our	operating	segments	is	evaluated	based	on	segment	operating	income	(loss),	which	is	defined	as	income	(loss)	before	income taxes	and	equity	in	loss	of	affiliate	and	before	the	following:	net	interest	expense,	net	other	non	operating	income	(loss),	corporate	expenses, restructuring,	impairment	and	other	charges,	inventory	impairment,	merger	and	related	costs,	goodwill	impairment	and	certain	gains	and	losses	not allocated	to	the	operating	segments.

# In	evaluating	the	segment	performance,	the	Company	uses	the	following:

Volume	&	Price:	Volume	is	the	increase	or	decrease	in	products	and/or	services	sold	period-over-period	excluding	the	impact	of	foreign	exchange and	price.	The	volume	impact	on	profit	is	calculated	by	multiplying	the	prior	period	profit	rate	by	the	change	in	revenue	volume	between	the	current	and prior	period.	Price	is	defined	as	the	change	in	sales	price	for	a	comparable	product	or	service	period-over-period	and	is	calculated	as	the	period-over- period	change	in	sales	prices	of	comparable	products	and	services.

Foreign	Exchange	(FX):	FX	measures	the	translational	foreign	exchange	impact,	or	the	translation	impact	of	the	period-over-period	change	on sales	and	costs	directly	attributable	to	change	in	the	foreign	exchange	rate	compared	to	the	US	dollar.	FX	impact	is	calculated	by	multiplying	the functional	currency	amounts	(revenue	or	profit)	with	the	period-over-period	FX	rate	variance,	using	the	average	exchange	rate	for	the	respective	period.

(Inflation)/Deflation:	(Inflation)/deflation	is	defined	as	the	increase	or	decrease	in	direct	and	indirect	costs	of	the	same	type	for	an	equal	amount	of volume.	It	is	calculated	as	the	year-over-year	change	in	cost	(i.e.	price	paid)	of	direct	material,	compensation	&	benefits	and	overhead	costs.

Productivity:	Productivity	is	measured	by	the	remaining	variance	in	profit,	after	adjusting	for	the	period-over-period	impact	of	volume	&	price,	foreign exchange	and	(inflation)/deflation	as	defined	above.	Improved	or	lower	period-over-period	cost	productivity	is	the	result	of	cost	efficiencies	or inefficiencies,	such	as	cost	decreasing	or	increasing	more	than	volume,	or	cost	increasing	or	decreasing	less	than	volume,	or	changes	in	sales	mix among	segments.	This	also	includes	the	period-over-period	variance	of	transactional	foreign	exchange,	aside	from	those	foreign	currency	devaluations that	are	reported	separately	for	business	evaluation	purposes.

# Revenue	and	Segment	Operating	Income	(Loss)	Before	Tax

Revenue	and	segment	operating	income	(loss)	for	each	of	our	four	operating	segments	is	provided	below.

|  | 2017 | Year	Ended	December	31,<br>2016 | 2015 | $	Change<br>From	2016	to<br>2017 | From	2015	to<br>2016 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Revenue: |  |  |  |  |  |
| Oilfield\tServices | $5,851 | $799 | $1,411 | $5,052 | $(612) |
| Oilfield\tEquipment | 2,637 | 3,547 | 5,060 | (910) | (1,513) |
| Turbomachinery\t&amp;\tProcess\tSolutions | 6,463 | 6,837 | 7,985 | (374) | (1,148) |
| Digital\tSolutions | 2,309 | 2,086 | 2,232 | 223 | (146) |
| Total | $17,259 | $13,269 | $16,688 | $3,990 | $(3,419) |

|  | Year	Ended	December	31, | Year	Ended	December	31, |  | $	Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2017 | 2016 | 2015 | From\t2016\tto\n2017 | From\t2015\tto\n2016 |
| Segment\toperating\tincome\t(loss): |  |  |  |  |  |
| Oilfield\tServices | $71 | $(204) | $(79) | $275 | $(125) |
| Oilfield\tEquipment | 38 | 320 | 677 | (282) | (357) |
| Turbomachinery\t&amp;\tProcess\tSolutions | 853 | 1,255 | 1,684 | (402) | (429) |
| Digital\tSolutions | 333 | 355 | 409 | (22) | (54) |
| Total\tsegment\toperating\tincome\t(loss) | 1,295 | 1,726 | 2,691 | (431) | (965) |
| Corporate | (373) | (380) | (260) | 7 | (120) |
| Inventory\timpairment\tand\trelated\tcharges\t(1) | (244) | (138) | (51) | (106) | (87) |
| Restructuring,\timpairment\tand\tother | (412) | (516) | (411) | 104 | (105) |
| Goodwill\timpairment | — | — | (2,080) | — | 2,080 |
| Merger\tand\trelated\tcosts | (373) | (33) | (27) | (340) | (6) |
| Operating\tincome\t(loss) | (107) | 659 | (138) | (766) | 797 |
| Other\tnon\toperating\tincome,\tnet | 78 | 27 | 100 | 51 | (73) |
| Interest\texpense,\tnet | (131) | (102) | (120) | (29) | 18 |
| Income\t(loss)\tbefore\tincome\ttaxes\tand\tequity\tin\tloss\tof\taffiliate | (160) | 584 | (158) | (744) | 742 |
| Equity\tin\tloss\tof\taffiliate | (11) | — | — | (11) | — |
| Provision\tfor\tincome\ttaxes | (71) | (250) | (473) | 179 | 223 |
| Net\tincome\t(loss) | $(242) | $334 | $(631) | $(576) | $965 |

(1) Inventory	impairments	and	related	charges	are	reported	in	the	"Cost	of	goods	sold"	caption	of	the	consolidated	and	combined	statements	of	income	(loss). 2017	includes	$87	million	of	adjustments	to	write-up	the	acquired	inventory	to	its	estimated	fair	value	on	acquisition	of	Baker	Hughes	as	this	inventory	was used	or	sold	in	the	six	months	ended	December	31,	2017.

Revenue	in	2017	was	$17,259	million,	an	increase	of	$3,990	million,	or	30%,	from	2016.	This	increase	was	primarily	driven	by	the	acquisition	of Baker	Hughes.	OFS	increased	$5,052	million,	DS	increased	$223	million,	OFE	decreased	$910	million,	and	TPS	decreased	$374	million.

Total	segment	operating	income	in	2017	was	 $1,295	million,	a	decrease	of	$431	million,	or	25%,	from	2016.	The	acquisition	of	Baker	Hughes added	$309	million	of	segment	operating	income,	but	was	more	than	offset	by	the	organic	impact	of	lower	productivity	and	pricing	pressure.	OFS increased	$275	million,	TPS	decreased	$402	million,	OFE	decreased	$282	million	and	DS	decreased	$22	million.

OFS	2017	segment	operating	income	was	 $71	million,	compared	to	a	loss	of	 $204	million	in	2016.	The	acquisition	of	Baker	Hughes	added	$315 million	of	segment	operating	income,	which	includes	increased	depreciation	&	amortization	expense	driven	by	purchase	accounting,	partially	offset	by pricing	pressure.

OFE	2017	revenue	was	$2,637	million,	a	decrease	of	$910	million,	or	26%,	from	2016.	The	revenue	decline	was	primarily	due	to	continued	volume pressures	and	to	a	lesser	extent	to	negative	pricing,	driven	by	the	delays	in	final	investment	decisions	by	our	customers	in	prior	years.

OFE	2017	segment	operating	income	was	 $38	million,	compared	to	$320	million	in	2016.	This	decline	in	profitability	was	the	result	of	negative productivity	and	volume,	while	strong	deflation	savings	more	than	offset	pricing	pressures.

TPS	2017	revenue	was	$6,463	million,	a	decrease	of	$374	million,	or	5%,	from	2016.	The	decline	was	primarily	attributable	to	negative	pricing	and to	a	lesser	extent	to	volume	decreases,	driven	by	lower	equipment	contracts	being	awarded	in	prior	years	and	continued	softness	in	the	services	market.

TPS	2017	segment	operating	income	was	$853	million,	compared	to	$1,255	million	in	2016.	This	decline	in	profitability	was	primarily	due	to unfavorable	cost	productivity.	Other	factors	were	lower	margin	equipment	backlog	throughput	and	the	impact	of	negative	pricing.

DS	2017	revenue	was	$2,309	million,	an	increase	of	$223	million,	or	11%,	from	2016,	driven	by	the	acquisition	of	Baker	Hughes	which	added	$211 million	of	revenue	versus	the	prior	year.

DS	2017	segment	operating	income	was	$333	million,	compared	to	$355	million	in	2016.	This	decline	in	profitability	was	primarily	driven	by	pricing pressure	and	to	a	lesser	extent	by	the	Baker	Hughes	acquisition	contributing	a	$5	million	segment	operating	loss.

# Corporate

In	2017,	corporate	expenses	were	$373	million,	a	decrease	of	$7	million	compared	to	2016.	This	was	primarily	due	to	selective	decreases	in	R&D program	investments	and	cost	productivity.

# Restructuring,	Impairment	and	Other

In	2017,	we	recognized	$412	million	in	restructuring,	impairment	and	other	charges,	a	decrease	of	 $104	million	compared	to	2016.	This	decrease was	driven	by	the	absence	of	any	significant	currency	devaluations	in	Angola	and	Nigeria	that	were	experienced	in	2016.

# Merger	and	Related	Costs

We	recorded	$373	million	of	merger	and	related	costs	in	2017,	an	increase	of	 $340	million	from	the	prior	year,	primarily	related	to	the	acquisition	of Baker	Hughes.

# Interest	Expense,	Net

In	2017,	we	incurred	net	interest	expense	of	 $131	million,	an	increase	of	$29	million	from	the	prior	year,	primarily	driven	by	the	debt	acquired	on	the acquisition	of	Baker	Hughes.

# Income	Tax

In	2017,	our	income	tax	expense	decreased	by	 $179	million,	from	$250	million	in	2016	to	$71	million	in	2017.	This	decrease	was	primarily	due	to	a benefit	of	$132	million	related	to	recent	U.S.	tax	reform	and	a	decline	in	profit.

Revenue	in	2016	was	$13,269	million,	a	decrease	of	$3,419	million,	or	20%,	from	2015.	This	decrease	was	primarily	due	to	the	continued	decline in	customer	activity	across	all	product	lines	due	to	the	continued	weakness	in	oil	prices.	OFE	decreased	$1,513	million,	TPS	decreased	$1,148	million, OFS	decreased	$612	million,	and	DS	decreased	 $146	million.

Total	segment	operating	income	in	2016	was	 $1,726	million,	a	decrease	of	$965	million,	or	36%,	from	2015.	This	decrease	was	primarily	driven	by the	combined	impact	of	lower	volume	and	pricing	pressure.	TPS	decreased	$429	million,	OFE	decreased	$357	million,	OFS	decreased	$125	million,	and DS	decreased	$54	million.

OFS	2016	revenue	was	$799	million,	a	decrease	of	$612	million,	or	43%,	from	2015.	This	decline	was	primarily	driven	by	the	impact	of	lower	oil prices	on	customer	purchasing	decisions	throughout	the	year.

OFS	2016	segment	operating	loss	was	 $204	million,	compared	to	a	loss	of	 $79	million	in	2015.	This	decline	in	profitability	was	mainly	due	to	lower cost	productivity,	partially	offset	by	cost	deflation.

OFE	2016	revenue	was	$3,547	million,	a	decrease	of	$1,513	million,	or	30%,	from	2015.	This	decline	was	primarily	due	to	customers'	activity reductions,	and	to	a	lesser	extent	to	the	strengthening	of	the	U.S.	dollar.

OFE	2016	segment	operating	income	was	 $320	million,	compared	to	$677	million	in	2015.	This	decline	in	profitability	was	the	result	of	lower revenue	and	negative	pricing,	as	well	as	lower	cost	productivity,	partially	offset	by	deflation	savings.

TPS	2016	revenue	was	$6,837	million,	a	decrease	of	$1,148	million,	or	14%,	from	2015.	The	decline	was	primarily	attributable	to	decreases	in volume	and	price,	driven	by	uncertainty	in	the	broader	market,	and	delays	in	equipment	contracts.

TPS	2016	segment	operating	income	was	$1,255	million,	compared	to	$1,684	million	in	2015.	This	decline	in	profitability	was	primarily	due	to	the impact	of	lower	volume	and	negative	pricing.

DS	2016	revenue	was	$2,086	million,	a	decrease	of	$146	million,	or	7%,	from	2015.	This	decline	was	due	to	lower	sales	volume	driven	by	the	delay of	capital	spending	projects	in	the	oil	and	gas	sector.

DS	2016	segment	operating	income	was	$355	million,	compared	to	$409	million	in	2015.	This	decline	in	profitability	was	driven	by	lower	cost productivity	and	weaker	sales	volume.

In	2016,	corporate	expenses	were	$380	million,	an	increase	of	$120	million	compared	to	2015.	This	was	primarily	due	to	selective	increases	in	R&D program	investments	and	lower	cost	productivity.

In	2016,	we	recognized	$516	million	in	restructuring,	impairment	and	other	charges,	an	increase	of	 $105	million	compared	to	2015.	This	increase was	driven	by	continued	focus	on	cost	rationalization	to	better	align	our	operating	structure	to	the	market	conditions,	and	significant	currency	devaluations in	Angola	and	Nigeria.

We	recorded	$33	million	of	merger	and	related	costs	in	2016,	an	increase	of	 $6	million	from	the	prior	year,	primarily	related	to	the	acquisition	of Baker	Hughes.

In	2016,	we	incurred	net	interest	expense	of	 $102	million,	a	decrease	of	$18	million	from	the	prior	year,	primarily	related	to	the	factoring	of	accounts receivable,	mainly	with	GE	Capital.

In	2016,	our	income	tax	expense	decreased	by	 $223	million,	to	$250	million	from	$473	million	in	2015.	This	decrease	was	primarily	due	to	a	decline in	profit	excluding	the	impairment	of	non-deductible	goodwill	of	$453	million

that	occurred	in	2015,	partially	offset	by	a	decrease	in	the	benefit	from	global	operations	including	foreign	tax	credit	benefits	of	$132	million.

# COMPLIANCE

We,	in	the	conduct	of	all	of	our	activities,	are	committed	to	maintaining	the	core	values	of	our	two	legacy	companies,	GE	Oil	&	Gas	and	Baker	Hughes Incorporated,	as	well	as	high	safety,	ethical	and	quality	standards	(Standards)	as	also	reported	in	our	Quality	Management	System	(QMS).	We	believe such	a	commitment	is	integral	to	running	a	sound,	successful,	and	sustainable	business.	To	ensure	that	we	live	up	to	our	high	Standards,	we	devote significant	resources	to	maintain	a	comprehensive	global	ethics	and	compliance	program	(Compliance	Program)	which	is	designed	to	prevent,	detect, and	appropriately	respond	in	a	timely	fashion	to	any	potential	violations	of	law,	our	Code	of	Conduct	(The	Spirit	&	The	Letter),	and	other	Company policies	and	procedures.

# Highlights	of	our	Compliance	Program	include	the	following:

•Comprehensive	internal	policies	over	such	areas	as	anti-bribery;	travel,	entertainment,	gifts	and	charitable	donations	connected	to	government officials;	payments	to	commercial	sales	representatives;	and,	the	use	of	non-U.S.	police	or	military	organizations	for	security	purposes.		In addition,	there	are	country-specific	guidance	for	customs	standards,	visa	processing,	export	and	re-export	controls,	economic	sanctions	and antiboycott	laws.

•Global	structure	of	Legal	Compliance	Counsel	and	Professionals	providing	compliance	advice,	customized	training,	investigations,	and governance,	across	all	regions	and	countries	where	we	do	business.

•Comprehensive	employee	compliance	training	program	that	combines	instructor-led	and	web-based	training	modules	tailored	to	the	key	risks	that employees	face	on	an	ongoing	basis.

•Due	diligence	procedures	for	commercial	sales	agents,	administrative	service	providers,	and	professional	consultants,	and	an	enhanced	risk- based	process	for	classifying	channel	partners	and	suppliers.

•Due	diligence	procedures	for	merger	and	acquisition	activities.

•Specifically	tailored	compliance	risk	assessments	focused	on	country	and	third	party	risk.

•Compliance	Review	Board	comprised	of	senior	officers	of	the	Company	that	meets	quarterly	to	monitor	effectiveness	of	the	Compliance	Program, as	well	as	Product	Company	and	regional	compliance	committees	that	meet	quarterly.

•Technology	to	monitor	and	report	on	compliance	matters,	including	an	internal	investigations	management	system,	a	web-based	antiboycott reporting	tool	and	global	trade	management	systems.

•A	compliance	program	designed	to	create	an	"Open	Reporting	Environment"	where	employees	are	encouraged	to	report	any	ethics	or compliance	matter	without	fear	of	retaliation,	including	a	global	network	of	trained	employee	ombudspersons,	and	a	worldwide,	24-hour	business helpline	operated	by	a	third	party	and	available	in	150	languages.

•Centralized	finance	organization	with	company-wide	policies.

•Anti-corruption	audits	of	high-risk	countries	conducted	by	Legal	Compliance	and	Internal	Audit,	as	well	as	risk	based	compliance	audits	of	third parties	conducted	by	Legal	Compliance.

•A	centralized	human	resources	function,	including	locally	compliant	processes	and	procedures	for	management	of	HR	related	issues,	including implementation	of	locally	compliant	standards	for	pre-hire	screening	of	employees;	a	process	to	screen	existing	employees	prior	to	promotion	to select	roles	where	they	may	be	exposed	to	finance	and/or	corruption-related	risks;	and	implementation	of	a	global	new	hire	compliance	training module	for	all	employees.

# LIQUIDITY	AND	CAPITAL	RESOURCES

Our	objective	in	financing	our	business	is	to	maintain	sufficient	liquidity,	adequate	financial	resources	and	financial	flexibility	in	order	to	fund	the requirements	of	our	business.	At	December	31,	2017,	we	had	cash	and	equivalents	of	 $7.0	billion	compared	to	$981	million	of	cash	and	equivalents	at December	31,	2016.	Cash	and	equivalents	includes	$997	million	of	cash	held	on	behalf	of	GE	at	December	31,	2017.

At	December	31,	2017,	approximately	$3.2	billion	of	our	cash	and	equivalents	was	held	by	foreign	subsidiaries	compared	to	approximately	$878 million	at	December	31,	2016.		A	substantial	portion	of	the	cash	held	by	foreign	subsidiaries	at	December	31,	2017	has	been	reinvested	in	active	non- U.S.	business	operations.	At	December	31,	2017,	our	intent	is,	among	other	things,	to	use	this	cash	to	fund	the	operations	of	our	foreign	subsidiaries,	and we	have	not	changed	our	indefinite	reinvestment	decision	as	a	result	of	U.S.	tax	reform	but	will	reassess	this	during	the	course	of	2018.	If	we	decide	at	a later	date	to	repatriate	those	funds	to	the	U.S.,	we	may	be	required	to	provide	taxes	on	certain	of	those	funds,	however,	due	to	the	enactment	of	U.S.	tax reform,	repatriations	of	foreign	earnings	will	generally	be	free	of	U.S.	federal	tax	but	may	incur	other	taxes	such	as	withholding	or	state	taxes.

On	July	3,	2017,	in	connection	with	the	Transactions,	BHGE	LLC	entered	into	a	new	five-year	$3	billion	committed	unsecured	revolving	credit	facility (2017	Credit	Agreement)	with	commercial	banks	maturing	in	July	2022.	As	of	December	31,	2017,	there	were	no	borrowings	under	the	2017	Credit Agreement.

On	November	3,	2017,	BHGE	LLC	entered	into	a	commercial	paper	program	under	which	it	may	issue	from	time	to	time	up	to	 $3	billion	in commercial	paper	with	maturities	of	no	more	than	397	days.	At	December	31,	2017,	there	were	no	borrowings	outstanding	under	the	commercial	paper program.	The	maximum	combined	borrowing	at	any	time	under	both	the	2017	Credit	Agreement	and	the	commercial	paper	program	is	$3	billion.

On	November	6,	2017,	we	announced	that	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	such	repurchase	that	are	distributed	to	the	Company	will	be	used	to	repurchase	Class	A	shares	of	the	Company	on the	open	market	or	in	privately	negotiated	transactions.

On	December	15,	2017,	we	filed	a	shelf	registration	statement	on	Form	S-3	with	the	SEC	to	give	us	the	ability	to	sell	up	to	$3	billion	in	debt	securities in	amounts	to	be	determined	at	the	time	of	an	offering.	Any	such	offering,	if	it	does	occur,	may	happen	in	one	or	more	transactions.	The	specific	terms	of any	securities	to	be	sold	will	be	described	in	supplemental	filings	with	the	SEC.	The	registration	statement	will	expire	in	2020.

During	the	year	ended	December	31,	2017,	we	used	cash	to	fund	a	variety	of	activities	including	certain	working	capital	needs	and	restructuring costs,	capital	expenditures,	business	acquisitions,	the	payment	of	dividends	and	share	repurchases.	We	believe	that	cash	on	hand,	cash	flows	generated from	operations	and	the	available	credit	facility	will	provide	sufficient	liquidity	to	manage	our	global	cash	needs.

# Cash	Flows

Cash	flows	provided	by	(used	in)	each	type	of	activity	were	as	follows	for	the	years	ended	December	31:

| (In	millions) | 2017 | 2016 | 2015 |
| :--- | :--- | :--- | :--- |
| Operating\tactivities | $(799) | $262 | $1,277 |
| Investing\tactivities | (4,130) | (472) | (466) |
| Financing\tactivities | 10,919 | (102) | (515) |

# Operating	Activities

Our	largest	source	of	operating	cash	is	payments	from	customers,	of	which	the	largest	component	is	collecting	cash	related	to	product	or	services sales	including	advance	payments	or	progress	collections	for	work	to	be	performed.	The	primary	use	of	operating	cash	is	to	pay	our	suppliers, employees,	tax	authorities	and	others	for	a	wide	range	of	material	and	services.

Cash	flows	from	operating	activities	used	cash	of	 $799	million	and	generated	cash	of	$262	million	for	the	years	ended	December	31,	2017	and	2016, respectively.	Cash	flows	from	operating	activities	decreased	$1,061	million	in	2017	primarily	driven	by	a	$1,201	million	negative	impact	from	ending	our receivables	monetization	program	in	the	fourth	quarter,	and	restructuring	related	payments	throughout	the	year.	These	cash	outflows	were	partially	offset by	strong	working	capital	cash	flows,	especially	in	the	fourth	quarter	of	2017.	Included	in	our	cash	flows	from	operating	activities	for	2017	and	2016	are payments	of	$612	million	and	$177	million,	respectively,	made	for	employee	severance	and	contract	termination	costs	as	a	result	of	our	restructuring activities	initiated	during	the	year.

Cash	flows	from	operating	activities	generated	$262	million	and	$1,277	million	for	the	years	ended	December	31,	2016	and	2015,	respectively.	Cash flows	from	operating	activities	decreased	$1,015	million	in	2016	primarily	due	to	the	decrease	in	net	income,	partially	offset	by	improvements	in	other working	capital	categories,	due	to	improvements	in	the	collection	of	past	due	receivables,	improved	inventory	management	and	restructuring.

# Investing	Activities

Our	principal	recurring	investing	activity	is	the	funding	of	capital	expenditures	to	ensure	that	we	have	the	appropriate	levels	and	types	of	machinery and	equipment	in	place	to	generate	revenue	from	operations.	Expenditures	for	capital	assets	totaled	$665	million,	$424	million	and	$607	million	for	2017, 2016	and	2015,	respectively,	partially	offset	by	cash	flows	from	the	sale	of	property,	plant	and	equipment	of	$172	million,	$20	million	and	$30	million	in 2017,	2016	and	2015,	respectively.	Proceeds	from	the	disposal	of	assets	related	primarily	to	equipment	that	was	lost-in-hole,	and	to	property,	machinery and	equipment	no	longer	used	in	operations	that	was	sold	throughout	the	period.

In	2017,	cash	flows	from	investing	activities	also	includes	$7,498	million	of	special	dividend	paid	to	former	Baker	Hughes	stockholders	on	the acquisition	of	Baker	Hughes,	net	of	$4,133	million	of	cash	received	from	the	acquisition.	There	were	no	material	business	dispositions	in	2017.

There	were	no	material	acquisitions	or	dispositions	in	2016,	however,	in	2015,	we	generated	cash	of	approximately	$181	million	from	business dispositions	and	utilized	cash	of	$86	million	for	business	acquisitions.

# Financing	Activities

Cash	flows	from	financing	activities	generated	cash	of	$10,919	million;	and	used	cash	of	$102	million	and	$515	million	for	the	years	ended	December 31,	2017,	2016	and	2015,	respectively.

In	2017,	our	primary	source	of	financing	cash	flows	was	a	contribution	of	$7,400	million	from	GE	to	fund	substantially	all	of	the	special	dividend	paid to	former	Baker	Hughes	stockholders.	We	also	generated	financing	cash	flows	of	$3,950	million	from	debt	issued	through	a	private	placement	offering	on December	11,	2017.	We	incurred	issuance	costs	of	$26	million	related	to	this	debt	issuance.

In	December	2017,	we	purchased	$176	million	of	the	aggregate	outstanding	principal	amount	associated	with	our	long-term	outstanding	notes	and debentures.	Pursuant	to	a	cash	tender	offer,	the	purchases	resulted	in	the	payment	of	an	early-tender	premium,	including	various	fees	of	$28	million.

Additionally,	in	2017,	we	paid	aggregate	dividends	of	$155	million	to	our	Class	A	stockholders,	and	BHGE	LLC	made	a	distribution	of	$251	million	to GE.	As	part	of	our	$3	billion	share	buyback	authorization,	we	used	cash	of	$174	million	and	$303	million,	respectively,	to	repurchase	and	cancel	our	Class A	and	Class	B	common	shares	and	corresponding	paired	common	units	in	BHGE	LLC,	on	a	pro	rata	basis.	The	repurchase	did	not	result	in	a	change	of GE's	approximate	62.5%	interest	in	BHGE	LLC.

Cash	flows	from	financing	activities	in	2017	also	included	net	transfers	from	GE	of	 $1,498	million	primarily	driven	by	the	cash	pooling	activity	with	GE prior	to	the	Transactions.	Other	financing	items	during	the	year	included	a	payment	of	$193	million	to	complete	the	purchase	of	the	non-controlling interest	in	the	Pipeline	Inspection	and	Integrity	business	within	Digital	Solutions.

# Available	Credit	Facility	and	Commercial	Paper	Program

On	July	3,	2017,	in	connection	with	the	Transactions,	we	entered	into	a	new	 five-year	$3	billion	committed	unsecured	revolving	credit	facility	(the 2017	Credit	Agreement)	with	commercial	banks	maturing	in	July	2022.	The	2017	Credit	Agreement	contains	certain	customary	representations	and warranties,	certain	affirmative	covenants	and	no	negative	covenants.	Upon	the	occurrence	of	certain	events	of	default,	our	obligations	under	the	2017 Credit	Agreement	may	be	accelerated.	Such	events	of	default	include	payment	defaults	to	lenders	under	the	2017	Credit	Agreement,	and	other customary	defaults.	We	were	in	compliance	with	all	of	the	credit	facility's	covenants,	and	in	2017	there	were	no	borrowings	under	the	credit	facility.

On	November	3,	2017,	BHGE	LLC	entered	into	a	commercial	paper	program	under	which	it	may	issue	from	time	to	time	up	to	 $3	billion	in commercial	paper	with	maturities	of	no	more	than	397	days.	At	December	31,	2017	we	had	no	borrowings	outstanding	under	the	commercial	paper program.	The	maximum	combined	borrowing	at	any	time	under	both	the	2017	Credit	Agreement	and	the	commercial	paper	program	is	$3	billion.

If	market	conditions	were	to	change	and	our	revenue	was	reduced	significantly	or	operating	costs	were	to	increase,	our	cash	flows	and	liquidity	could be	reduced.	Additionally,	it	could	cause	the	rating	agencies	to	lower	our	credit	rating.	There	are	no	ratings	triggers	that	would	accelerate	the	maturity	of any	borrowings	under	our	committed	credit	facility.	However,	a	downgrade	in	our	credit	ratings	could	increase	the	cost	of	borrowings	under	the	credit facility	and	could	also	limit	or	preclude	our	ability	to	issue	commercial	paper.	Should	this	occur,	we	could	seek	alternative	sources	of	funding,	including borrowing	under	the	credit	facility.

# Cash	Requirements

In	2018,	we	believe	cash	on	hand,	cash	flows	from	operating	activities,	the	available	debt	shelf	registration,	and	the	2017	Credit	Agreement	will provide	us	with	sufficient	capital	resources	and	liquidity	to	manage	our	working	capital	needs,	meet	contractual	obligations,	fund	capital	expenditures	and dividends,	and	support	the	development	of	our	short-term	and	long-term	operating	strategies.	If	necessary,	we	may	issue	commercial	paper	or	other short-term	debt	to	fund	cash	needs	in	the	U.S.	in	excess	of	the	cash	generated	in	the	U.S.

Our	capital	expenditures	can	be	adjusted	and	managed	by	us	to	match	market	demand	and	activity	levels.	In	light	of	the	current	market	conditions, capital	expenditures	in	2018	will	be	made	as	appropriate	at	a	rate	that	we	estimate	would	equal	up	to	5%	of	annual	revenue.	The	expenditures	are expected	to	be	used	primarily	for	normal,	recurring	items	necessary	to	support	our	business.	We	also	anticipate	making	income	tax	payments	in	the range	of	$325	million	to	$375	million	in	2018.

# Contractual	Obligations

In	the	table	below,	we	set	forth	our	contractual	obligations	as	of	 December	31,	2017.	Certain	amounts	included	in	this	table	are	based	on	our estimates	and	assumptions	about	these	obligations,	including	their	duration,	anticipated	actions	by	third	parties	and	other	factors.	The	contractual obligations	we	will	actually	pay	in	future	periods	may	vary	from	those	reflected	in	the	table	because	the	estimates	and	assumptions	are	subjective.

|  |  | Payments	Due	by	Period | Payments	Due	by	Period |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Less\tThan | 1\t-\t3 | 4\t-\t5 | More\tThan |
| (In\tmillions) | Total | 1\tYear | Years | Years | 5\tYears |
| Total\tdebt\tand\tcapital\tlease\tobligations\t^(1) | $8,081 | $2,013 | $56 | $1,729 | $4,283 |
| Estimated\tinterest\tpayments\t(2) | 4,018 | 274 | 481 | 461 | 2,802 |
| Operating\tleases\t(3) | 688 | 156 | 214 | 130 | 188 |
| Purchase\tobligations\t(4) | 1,121 | 962 | 87 | 59 | 13 |
| Total | $13,908 | $3,405 | $838 | $2,379 | $7,286 |

(1) Amounts	represent	the	expected	cash	payments	for	the	principal	amounts	related	to	our	debt,	including	capital	lease	obligations.	Amounts	for	debt	do	not include	any	deferred	issuance	costs	or	unamortized	discounts	or	premiums	including	step	up	in	the	value	of	the	debt	on	the	acquisition	of	Baker	Hughes. Expected	cash	payments	for	interest	are	excluded	from	these	amounts.	Total	debt	and	capital	lease	obligations	includes	$1,124	million	payable	to	GE	and	its affiliates.	As	there	is	no	fixed	payment	schedule	on	the	amount	payable	to	GE	and	its	affiliates	we	have	classified	it	as	payable	in	less	than	one	year.

(2) Amounts	represent	the	expected	cash	payments	for	interest	on	our	long-term	debt	and	capital	lease obligations.

(3) Amounts	represent	the	future	minimum	payments	under	noncancelable	operating	leases	with	initial	or	remaining	terms	of	one	year	or	more.	We	enter	into operating	leases,	some	of	which	include	renewal	options,	however,	we	have	excluded	renewal	options	from	the	table	above	unless	it	is	anticipated	that	we will	exercise	such	renewals.

(4) Purchase	obligations	include	capital	improvements	for	2018	as	well	as	agreements	to	purchase	goods	or	services	that	are	enforceable	and	legally	binding and	that	specify	all	significant	terms,	including:	fixed	or	minimum	quantities	to	be	purchased;	fixed,	minimum	or	variable	price	provisions;	and	the approximate	timing	of	the	transaction.

Due	to	the	uncertainty	with	respect	to	the	timing	of	potential	future	cash	outflows	associated	with	our	uncertain	tax	positions,	we	are	unable	to	make reasonable	estimates	of	the	period	of	cash	settlement,	if	any,	to	the	respective	taxing	authorities.	Therefore,	$543	million	in	uncertain	tax	positions, including	interest	and	penalties,	have	been	excluded	from	the	contractual	obligations	table	above.	See	"Note	10.	Income	Taxes"	of	the	Notes	to Consolidated	and	Combined	Financial	Statements	in	Item	8	herein	for	further	information.

We	have	certain	defined	benefit	pension	and	other	post-retirement	benefit	plans	covering	certain	of	our	U.S.	and	international	employees.	During 2017,	we	made	contributions	and	paid	direct	benefits	of	approximately	$63	million	in	connection	with	those	plans,	and	we	anticipate	funding	approximately $68	million	during	2018.	Amounts	for	pension	funding	obligations	are	based	on	assumptions	that	are	subject	to	change,	therefore,	we	are	currently	not able	to	reasonably	estimate	our	contribution	figures	after	2018.	See	"Note	9.	Employee	Benefit	Plans"	of	the	Notes	to	Consolidated	and	Combined Financial	Statements	in	Item	8	herein	for	further	information.

# Off-Balance	Sheet	Arrangements

In	the	normal	course	of	business	with	customers,	vendors	and	others,	we	have	entered	into	off-balance	sheet	arrangements,	such	as	surety	bonds for	performance,	letters	of	credit	and	other	bank	issued	guarantees,	which	totaled	approximately	$3.4	billion	at	December	31,	2017.	It	is	not	practicable	to estimate	the	fair	value	of	these	financial	instruments.	None	of	the	off-balance	sheet	arrangements	either	has,	or	is	likely	to	have,	a	material	effect	on	our consolidated	and	combined	financial	statements.

As	of	December	31,	2017,	we	had	no	material	off-balance	sheet	financing	arrangements	other	than	normal	operating	leases,	as	discussed	above.	As such,	we	are	not	materially	exposed	to	any	financing,	liquidity,	market	or	credit	risk	that	could	arise	if	we	had	engaged	in	such	financing	arrangements.

# Other	factors	affecting	liquidity

Customer	receivables:	In	line	with	industry	practice,	we	may	bill	our	customers	for	services	provided	in	arrears	dependent	upon	contractual	terms.	In a	challenging	economic	environment,	we	may	experience	delays	in	the	payment	of	our	invoices	due	to	customers'	lower	cash	flow	from	operations	or their	more	limited	access	to	credit	markets.	While	historically	there	have	not	been	material	non-payment	events,	we	attempt	to	mitigate	this	risk	through working	with	our	customers	to	restructure	their	debts.	A	customer's	failure	or	delay	in	payment	could	have	a	material	adverse	effect	on	our	short-term liquidity	and	results	from	operations.	As	of	December	31,	2017,	20%	of	our	gross	trade	receivables	were	from	customers	in	the	United	States.	Other	than the	United	States,	no	other	country	or	single	customer	accounted	for	more	than	10%	of	our	gross	trade	receivables	at	this	date.	As	of	December	31, 2016,	13%	of	our	gross	trade	receivables	were	from	customers	in	the	United	States.

Venezuela:	Oil	production	is	considered	important	to	the	Venezuelan	economy;	therefore,	we	intend	to	continue	to	provide	services	to	our	primary customer	in	this	country,	however,	we	are	required	to	assess	the	ability	of	the	customer	to	make	timely	payments	on	amounts	owed	to	us.	This assessment	is	performed	on	a	quarterly	basis	with	the	business	relying	on	a	variety	of	data	sources	to	assess	the	collectability	of	outstanding	receivables and	recoverability	of	other	assets	supporting	this	customer.	We	noted	that	there	are	recent	market	indicators,	such	as	a	decline	in	bond	prices	and several	delayed	payments	on	various	bond	obligations,	that	indicate	that	the	customer's	financial	condition	may	have	worsened	in	the	last	three	months. We	continue	to	actively	manage	our	relationship	with	this	customer	as	they	transition	through	a	difficult	period,	with	ongoing	dialogue	between	key executives	of	both	companies,	including	discussions	regarding	this	customer's	ability	and	intent	to	ultimately	settle	our	trade	receivables.

In	performing	our	analysis	of	customer-specific	assets	as	of	December	31,	2017,	we	considered	that	our	outstanding	receivables	do	not	have	the same	priority	as	certain	of	the	customer's	other	obligations.	We	have	concluded	that	it	may	take	an	extended	period	of	time	to	ultimately	collect	our outstanding	receivables;	accordingly,	we	have	recorded	an	increase	to	our	allowance	for	doubtful	accounts	of	$55	million	in	the	three	months	ended December	31,	2017	to	fully	offset	our	remaining	exposure	to	trade	receivables	and	other	assets	from	this	customer.	In	addition,	since	future	receivables generated	as	a	result	of	our	ongoing	contracts	will	have	the	same	priority	as	our	existing	receivables	when	issued,	the	business	has	concluded	that	an allowance	amounting	to	$32	million	to	reduce	inventory	that	has	been	purchased	for	these	contracts	(and	that	is	not	redeployable	to	fulfill	other	customer contracts)	to	its	lower	of	cost	or	net	realizable	value	is	warranted.	We	will	update	our	analysis	on	a	quarterly	basis;	to	the	extent	that	our	outstanding receivables	are	settled	or	the	likelihood	of	settling	our	outstanding	receivables	in	the	near	term	improves,	we	will	reverse	our	existing	provision	for doubtful	accounts,	which	would	result	in	an	income	during	the	period	of	reversal.

International	operations:	Our	cash	that	is	held	outside	the	U.S.,	is	46%	of	the	total	cash	balance	as	of	December	31,	2017.	We	may	not	be	able	to use	this	cash	quickly	and	efficiently	due	to	exchange	or	cash	controls	that	could	make	it	challenging.	As	a	result,	our	cash	balance	may	not	represent	our ability	to	quickly	and	efficiently	use	this	cash.

# CRITICAL	ACCOUNTING	ESTIMATES

Accounting	estimates	and	assumptions	discussed	in	this	section	are	those	considered	to	be	the	most	critical	to	an	understanding	of	our	financial statements	because	they	involve	significant	judgments	and	uncertainties.	Many	of	these	estimates	include	determining	fair	value.	These	estimates	reflect our	best	judgment	about	current,	and	for	some	estimates	future,	economic	and	market	conditions	and	their	potential	effects	based	on	information available	as	of	the	date	of	these	financial	statements.	If	these	conditions	change	from	those	expected,	it	is	reasonably	possible	that	the	judgments	and estimates	described	below	could	change,	which	may	result	in	future	impairments	of	goodwill,	intangibles	and	longlived	assets,	increases	in	reserves	for contingencies,	establishment	of	valuation	allowances	on	deferred	tax	assets	and	increased	tax	liabilities,	among	other	effects.	Also,	see	"Note	1. Summary	of	Significant	Accounting	Policies"	of	the	Notes	to	Consolidated	and	Combined	Financial	Statements	in	Item	8	herein,	which	discusses	our most	significant	accounting	policies.

We	have	defined	a	critical	accounting	estimate	as	one	that	is	both	important	to	the	portrayal	of	either	our	financial	condition	or	results	of	operations and	requires	us	to	make	difficult,	subjective	or	complex	judgments	or	estimates	about	matters	that	are	uncertain.	The	Audit	Committee	of	our	Board	of Directors	has	reviewed	our	critical

accounting	estimates	and	the	disclosure	presented	below.	During	the	past	three	fiscal	years,	we	have	not	made	any	material	changes	in	the methodology	used	to	establish	the	critical	accounting	estimates,	and	we	believe	that	the	following	are	the	critical	accounting	estimates	used	in	the preparation	of	our	consolidated	and	combined	financial	statements.	There	are	other	items	within	our	consolidated	and	combined	financial	statements	that require	estimation	and	judgment	but	they	are	not	deemed	critical	as	defined	above.

# Revenue	Recognition	on	Long-Term	Product	Services	Agreements

We	have	long-term	service	agreements	with	our	customers	predominately	within	our	TPS	segment.	These	agreements	typically	require	us	to maintain	assets	sold	to	the	customer	over	a	defined	contract	term.	These	agreements	have	average	contract	terms	of	15	years.	From	time	to	time,	these contract	terms	may	be	extended	through	contract	modifications	or	amendments,	which	may	result	in	revisions	to	future	billing	and	cost	estimates.

We	recognize	revenue	as	we	incur	costs	to	perform	under	the	arrangements	at	the	estimated	margin	rate	of	the	contract.	Revenue	recognition	on long-term	product	services	agreements	requires	estimates	of	both	customer	payments	and	the	costs	to	perform	required	maintenance	services	over	the contract	term.

To	develop	our	billings	estimates,	we	consider	the	number	of	billable	events	that	will	occur	based	on	estimated	utilization	of	the	asset	under	contract, over	the	life	of	the	contract	term.	This	estimated	utilization	will	consider	both	historical	and	market	conditions,	asset	retirements	and	new	product introductions,	if	applicable.

To	develop	our	cost	estimates,	we	consider	the	timing	and	extent	of	maintenance	and	overhaul	events,	including	the	amount	and	cost	of	labor,	spare parts	and	other	resources	required	to	perform	the	services.	In	developing	our	cost	estimates,	we	utilize	a	combination	of	our	historical	cost	experience and	expected	cost	improvements.	Cost	improvements	are	only	included	in	future	cost	estimates	after	savings	have	been	observed	in	actual	results	or proven	effective	through	an	extensive	regulatory	or	engineering	approval	process.

We	routinely	review	the	estimates	used	in	our	product	services	agreements	and	regularly	revise	them	to	adjust	for	changes.	These	revisions	are based	on	objectively	verifiable	information	that	is	available	at	the	time	of	the	review.

The	difference	between	the	timing	of	our	revenue	recognition	and	cash	received	from	our	customers	results	in	either	a	contract	asset	(revenue	in excess	of	billings)	or	a	contract	liability	(billings	in	excess	of	revenue).	As	of	December	31,	2017,	and	2016,	we	recorded	a	contract	asset	of	$1,410 million	and	$1,046	million	and	contract	liability	of	$83	million	and	$103	million,	respectively.

We	regularly	assess	customer	credit	risk	inherent	in	the	carrying	amounts	of	receivables	and	contract	assets	and	estimated	earnings,	including	the risk	that	contractual	penalties	may	not	be	sufficient	to	offset	our	accumulated	investment	in	the	event	of	customer	termination.	We	gain	insight	into expected	future	utilization	and	cost	trends,	as	well	as	credit	risk,	through	our	knowledge	of	the	equipment	installed	and	the	close	interaction	with	our customers	through	supplying	critical	services	and	parts	over	extended	periods.	Revisions	to	cost	or	billing	estimates	may	affect	a	product	services agreement's	total	estimated	profitability	resulting	in	an	adjustment	of	earnings;	such	adjustments	generated	earnings	of	$344	million,	$293	million	and $256	million	for	each	of	the	years	ended	December	31,	2017,	2016	and	2015,	respectively.	We	provide	for	probable	losses	when	they	become	evident.

We	continue	to	evaluate	the	provisions	of	ASC	No.	606,	Revenue	from	Contracts	with	Customers,	and	the	assessment	of	the	impact	on	our consolidated	and	combined	financial	statements	and	related	disclosures.	Also,	see	"Note	1.	Summary	of	Significant	Accounting	Policies"	of	the	Notes	to Consolidated	and	Combined	Financial	Statements	in	Item	8	herein	for	additional	information	and	disclosure.

# Goodwill	and	Other	Identified	Intangible	Assets

We	test	goodwill	for	impairment	annually	using	data	as	of	July	1	of	that	year.	The	impairment	test	consists	of	two	different	steps:	in	step	one,	the carrying	value	of	the	reporting	unit	is	compared	with	its	fair	value,	in	step	two,	which	is	applied	only	when	the	carrying	value	is	more	than	its	fair	value, the	amount	of	goodwill	impairment,	if	any,	is	derived	by	deducting	the	fair	value	of	the	reporting	unit's	assets	and	liabilities	from	the	fair	value	of	its	equity and	comparing	that	amount	with	the	carrying	amount	of	goodwill.	We	determine	fair	values	of	each	of	the	reporting	units

using	the	market	approach,	when	available	and	appropriate,	or	the	income	approach,	or	a	combination	of	both.	We	assess	the	valuation	methodology based	upon	the	relevance	and	availability	of	the	data	at	the	time	the	valuation	is	performed.

# Pension	Assumptions

Pension	benefits	are	calculated	using	significant	inputs	to	the	actuarial	models	that	measure	pension	benefit	obligations	and	related	effects	on operations.	Two	assumptions,	discount	rate	and	expected	return	on	assets,	are	important	elements	of	plan	expense	and	asset/liability	measurement.	We evaluate	these	critical	assumptions	at	least	annually	on	a	plan	and	country	specific	basis.	We	periodically	evaluate	other	assumptions	involving demographic	factors	such	as	retirement	age,	mortality	and	turnover,	and	update	them	to	reflect	its	experience	and	expectations	for	the	future.	Actual results	in	any	given	year	will	often	differ	from	actuarial	assumptions	because	of	economic	and	other	factors.

Projected	benefit	obligations	are	measured	as	the	present	value	of	expected	payments	discounted	using	the	weighted	average	of	market	observed yields	for	high	quality	fixed	income	securities	with	maturities	that	correspond	to	the	payment	of	benefits,	lower	discount	rates	increase	present	values	and subsequent	year	pension	expense	and	higher	discount	rates	decrease	present	values	and	subsequent	year	pension	expense.	The	discount	rates	used	to determine	the	benefit	obligations	for	our	principal	pension	plans	at	December	31,	2017,	2016	and	2015	were	2.99%,	3.41%	and	3.83%,	respectively, reflecting	market	interest	rates.	Our	expected	return	on	assets	at	December	31,	2017,	2016	and	2015	were	6.26%,	6.86%	and	6.91%,	respectively.

# Income	Taxes

We	operate	in	more	than	120	countries	and	our	effective	tax	rate	is	based	on	our	income,	statutory	tax	rates	and	differences	between	tax	laws	and the	U.S.	generally	accepted	accounting	principles	(GAAP)	in	these	various	jurisdictions.	Tax	laws	are	complex	and	subject	to	different	interpretations	by the	taxpayer	and	respective	governmental	taxing	authorities.	Our	income	tax	rate	is	significantly	affected	by	the	tax	rate	on	our	global	operations.	In addition	to	local	country	tax	laws	and	regulations,	this	rate	depends	on	the	extent	earnings	are	indefinitely	reinvested	outside	the	U.S.	Historically,	U.S. taxes	were	due	upon	repatriation	of	foreign	earnings.	Due	to	the	enactment	of	U.S.	tax	reform,	repatriations	of	foreign	earnings	will	generally	be	free	of U.S.	federal	tax	but	may	incur	other	taxes	such	as	withholding	or	state	taxes.	Indefinite	reinvestment	is	determined	by	management's	judgment	about and	intentions	concerning	the	future	operations	of	the	Company.	Most	of	these	earnings	have	been	reinvested	in	active	non-U.S.	business	operations.	At December	31,	2017,	we	have	not	changed	our	indefinite	reinvestment	decision	as	a	result	of	U.S.	tax	reform	but	will	reassess	this	during	the	course	of 2018.	At	December	31,	2017,	approximately	$8.0	billion	of	earnings	have	been	indefinitely	reinvested	outside	the	U.S.	These	additional	foreign	earnings could	become	subject	to	additional	tax,	if	remitted,	or	deemed	remitted,	as	a	dividend.	Computation	of	the	potential	deferred	tax	liability	associated	with these	undistributed	earnings	and	any	other	basis	differences	is	not	practicable.

Deferred	income	tax	assets	represent	amounts	available	to	reduce	income	taxes	payable	in	future	years.	We	evaluate	the	recoverability	of	these future	tax	deductions	and	credits	by	assessing	the	adequacy	of	future	taxable	income	from	all	sources,	including	reversal	of	taxable	temporary differences,	forecasted	operating	earnings	and	available	tax	planning	strategies.	These	sources	of	income	rely	heavily	on	estimates.	We	use	our historical	experience	and	short	and	long	range	business	forecasts	to	provide	insight.	We	record	a	valuation	allowance	when	it	is	more	likely	than	not	that some	portion	or	all	of	the	deferred	tax	assets	will	not	be	realized.

On	December	22,	2017,	the	U.S.	enacted	the	Tax	Cuts	and	Jobs	Act	(U.S.	tax	reform)	that	lowers	the	statutory	tax	rate	on	U.S.	earnings,	taxes historic	foreign	earnings	previously	deferred	from	U.S.	taxation	at	a	reduced	rate	of	tax	(transition	tax),	establishes	a	territorial	tax	system	and	enacts	new taxes	associated	with	global	operations.

The	impact	of	U.S.	tax	reform	has	been	recorded	on	a	provisional	basis	as	the	legislation	provides	for	additional	guidance	to	be	issued	by	the	U.S. Department	of	the	Treasury	on	several	provisions,	including	the	computation	of	the	transition	tax.	Guidance	in	2018	could	impact	the	information	required for	and	the	calculation	of	the	transition	tax	charge	and	could	affect	decisions	that	affect	the	tax	on	various	U.S.	and	foreign	items	which	would	further impact	the	final	amounts	included	in	the	transition	tax	charge	and	impact	the	revaluation	of	deferred	taxes.	In	addition,

analysis	performed	and	conclusions	reached	as	part	of	the	tax	return	filing	process	and	additional	guidance	on	accounting	for	tax	reform	could	affect	the provisional	amount.

Additionally,	as	part	of	U.S.	tax	reform,	the	U.S.	has	enacted	a	tax	on	"base	eroding"	payments	from	the	U.S.	and	a	minimum	tax	on	foreign	earnings (global	intangible	low-taxed	income).	Because	aspects	of	the	new	minimum	tax	and	the	effect	on	our	operations	is	uncertain	and	because	aspects	of	the accounting	rules	associated	with	this	provision	have	not	been	resolved,	we	have	not	made	a	provisional	accrual	for	the	deferred	tax	aspects	of	this provision	and	consequently	have	not	made	an	accounting	policy	election	on	the	deferred	tax	treatment	of	this	tax.

Our	tax	filings	routinely	are	subject	to	audit	by	the	tax	authorities	in	the	jurisdictions	where	we	conduct	business.	These	audits	may	result	in assessments	of	additional	taxes	that	are	resolved	with	the	tax	authorities	or	through	the	courts.	We	have	provided	for	the	amounts	we	believe	will ultimately	result	from	these	proceedings,	but	settlements	of	issues	raised	in	these	audits	may	affect	our	tax	rate.	We	have	$395	million	of	gross unrecognized	tax	benefits,	excluding	interest	and	penalties,	at	December	31,	2017.	We	are	not	able	to	reasonably	estimate	in	which	future	periods	these amounts	ultimately	will	be	settled.

# Other	Loss	Contingencies

Other	loss	contingencies	are	uncertain	and	unresolved	matters	that	arise	in	the	ordinary	course	of	business	and	result	from	events	or	actions	by others	that	have	the	potential	to	result	in	a	future	loss.	Such	contingencies	include,	but	are	not	limited	to,	environmental	obligations,	litigation,	regulatory proceedings,	product	quality	and	losses	resulting	from	other	events	and	developments.

The	preparation	of	our	consolidated	and	combined	financial	statements	requires	us	to	make	estimates	and	judgments	that	affect	the	reported amounts	of	assets,	liabilities,	revenue	and	expenses	and	related	disclosures	as	well	as	disclosures	about	any	contingent	assets	and	liabilities.	We	base these	estimates	and	judgments	on	historical	experience	and	other	assumptions	and	information	that	are	believed	to	be	reasonable	under	the circumstances.	Estimates	and	assumptions	about	future	events	and	their	effects	are	subject	to	uncertainty	and,	accordingly,	these	estimates	may	change as	new	events	occur,	as	more	experience	is	acquired,	as	additional	information	is	obtained	and	as	the	business	environment	in	which	we	operate changes.

# Allowance	for	Doubtful	Accounts

The	determination	of	the	collectability	of	amounts	due	from	our	customers	requires	us	to	make	judgments	and	estimates	regarding	our	customers' ability	to	pay	amounts	due	us	in	order	to	determine	the	amount	of	valuation	allowances	required	for	doubtful	accounts.	We	monitor	our	customers' payment	history	and	current	credit	worthiness	to	determine	that	collectability	is	reasonably	assured.	We	also	consider	the	overall	business	climate	in which	our	customers	operate.	Provisions	for	doubtful	accounts	are	recorded	based	on	the	aging	status	of	the	customer	accounts	or	when	it	becomes evident	that	the	customer	will	not	make	the	required	payments	at	either	contractual	due	dates	or	in	the	future.	At	December	31,	2017	and	2016,	the allowance	for	doubtful	accounts	totaled	$330	million	and	$186	million	of	total	gross	accounts	receivable,	respectively.	We	believe	that	our	allowance	for doubtful	accounts	is	adequate	to	cover	potential	bad	debt	losses	under	current	conditions,	however,	uncertainties	regarding	changes	in	the	financial condition	of	our	customers,	either	adverse	or	positive,	could	impact	the	amount	and	timing	of	any	additional	provisions	for	doubtful	accounts	that	may	be required.

# Inventory	Reserves

Inventory	is	a	significant	component	of	current	assets	and	is	stated	at	the	lower	of	cost	or	net	realizable	value.	This	requires	us	to	record	provisions and	maintain	reserves	for	excess,	slow	moving	and	obsolete	inventory.	To	determine	these	reserve	amounts,	we	regularly	review	inventory	quantities	on hand	and	compare	them	to	estimates	of	future	product	demand,	market	conditions,	production	requirements	and	technological	developments.	These estimates	and	forecasts	inherently	include	uncertainties	and	require	us	to	make	judgments	regarding	potential	future	outcomes.	At	December	31,	2017 and	2016,	inventory	reserves	totaled	$360	million	and	$260	million	of	gross	inventory,	respectively.	We	believe	that	our	reserves	are	adequate	to	properly value	potential	excess,	slow	moving	and	obsolete	inventory	under	current	conditions.	Significant	or	unanticipated	changes	to	our	estimates	and	forecasts could	impact	the	amount	and	timing	of	any	additional	provisions	for	excess,	slow	moving	or	obsolete	inventory	that	may	be	required.

# Acquisitions-Purchase	Price	Allocation

We	allocate	the	purchase	price	of	an	acquired	business	to	its	identifiable	assets	and	liabilities	based	on	estimated	fair	values.	The	excess	of	the purchase	price	over	the	amount	allocated	to	the	assets	and	liabilities,	if	any,	is	recorded	as	goodwill.	We	use	all	available	information	to	estimate	fair values,	including	quoted	market	prices,	the	carrying	value	of	acquired	assets	and	widely	accepted	valuation	techniques	such	as	discounted	cash	flows. We	engage	third-party	appraisal	firms	to	assist	in	fair	value	determination	of	inventories,	identifiable	intangible	assets	and	any	other	significant	assets	or liabilities	when	appropriate.	The	judgments	made	in	determining	the	estimated	fair	value	assigned	to	each	class	of	assets	acquired	and	liabilities assumed,	as	well	as	asset	lives,	can	materially	impact	our	results	of	operations.

# NEW	ACCOUNTING	STANDARDS	TO	BE	ADOPTED

See	"Note	1.	Summary	of	Significant	Accounting	Policies"	of	the	Notes	to	Consolidated	and	Combined	Financial	Statements	in	Item	8	herein	for further	discussion	of	accounting	standards	to	be	adopted.

# RELATED	PARTY	TRANSACTIONS

See	"Note	16.	Related	Party	Transactions"	of	the	Notes	to	Consolidated	and	Combined	Financial	Statements	in	Item	8	herein	for	further	discussion of	related	party	transactions.

# OTHER	ITEMS

# Iran	Threat	Reduction	And	Syria	Human	Rights	Act	Of	2012

The	Company	is	making	the	following	disclosure	pursuant	to	Section	13(r)	of	the	Securities	Exchange	Act	of	1934.	Under	Section	13(r)	of	the Securities	Exchange	Act	of	1934,	enacted	in	2012,	we	are	required	to	disclose	in	our	periodic	reports	if	we	or	any	of	our	affiliates	knowingly	engaged	in business	activities	relating	to	Iran,	even	if	those	activities	are	conducted	in	accordance	with	authorizations	subsequently	issued	by	the	U.S.	Government. Reportable	activities	include	investments	that	significantly	enhance	Iran's	ability	to	develop	petroleum	resources	valued	at	$20	million	or	more	in	the aggregate	during	a	twelve-month	period.	Reporting	is	also	required	for	transactions	related	to	Iran's	domestic	production	of	refined	petroleum	products	or Iran's	ability	to	import	refined	petroleum	products	valued	at	$5	million	or	more	in	the	aggregate	during	a	twelve-month	period.

In	January	2016,	the	U.S.	Department	of	Treasury's	Office	of	Foreign	Assets	Control	(OFAC)	issued	General	License	H	authorizing	U.S.-owned	or controlled	foreign	entities	to	engage	in	transactions	with	Iran	if	these	entities	meet	the	requirements	of	the	general	license.	Pursuant	to	this	authorization, a	non-U.S.	BHGE	affiliate	received	seven	purchase	orders	during	the	fourth	quarter	of	2017	for	the	sale	of	goods	pursuant	to	General	License	H	that could	potentially	enhance	Iran's	ability	to	develop	petroleum	resources.	The	purchase	orders	cover	the	sale	of	valves	and	parts	for	industrial	machinery and	equipment	used	in	gas	plants,	petrochemical	plants	and	gas	production	projects	in	Iran.	These	purchase	orders	are	valued	at	less	than	€0.1	million ($0.1	million),	less	than	€0.1	million	($0.1	million),	less	than	€0.1	million	($0.1	million),	€0.3	million	($0.3	million),	€0.7	million	($0.8	million),	€0.1	million ($0.1	million)	and	€0.8	million	($1	.0	million).	This	non-US	affiliate	also	received	a	cancellation	of	a	previously	reported	contract	for	the	sale	of	spare	parts for	gas	turbines.	This	purchase	order	cancellation	reduces	previously	reported	contract	values	by	€12.3	million	($12.9	million).	This	non-U.S.	affiliate attributed	€6.8	million	($8.2	million)	in	gross	revenue	and	€1.4	million	($1.7	million)	in	net	profits	against	previously	reported	transactions	during	the quarter	ending	December	31,	2017.

A	second	non-U.S.	BHGE	affiliate	received	three	purchase	orders	during	the	fourth	quarter	of	2017	for	the	sale	of	spares	parts	to	support	the development	of	offshore	petroleum	resources.	The	three	purchase	orders	are	individually	valued	at	less	than	€0.1	million	($0.1	million),	less	than	€0.1 million	($0.1	million),	and	less	than	€0.1	million	($0.1	million)	each.	This	non-U.S.	affiliate	did	not	recognize	any	revenue	or	profit	during	the	quarter ending	December	31,	2017.

A	third	non-U.S.	BHGE	affiliate	received	a	purchase	order	pursuant	to	General	License	H	valued	at	€0.2	million	($0.2	million)	during	the	fourth quarter	of	2017.	The	non-U.S.	affiliate	also	received	a	purchase	order	at	the	very	end	of	the	third	quarter	valued	at	€0.3	million	($0.3	million).	Both purchase	orders	cover	the	sale	of	films	to	be	used

in	inspection	of	pipelines	in	Iran.	This	non-U.S.	affiliate	did	not	recognize	any	revenue	or	profit	during	the	quarter	ending	December	31,	2017.

All	of	these	non-U.S.	affiliates	intend	to	continue	the	activities	described	above,	as	permitted	by	all	applicable	laws	and	regulations.

# FORWARD-LOOKING	STATEMENTS

This	Form	10-K,	including	MD&A	and	certain	statements	in	the	Notes	to	Consolidated	and	Combined	Financial	Statements,	contains	forward-looking statements	within	the	meaning	of	Section	27A	of	the	Securities	Act	of	1933,	as	amended,	and	Section	21E	of	the	Exchange	Act	of	1934,	as	amended, (each	a	"forward-looking	statement").	Forward-looking	statements	concern	future	circumstances	and	results	and	other	statements	that	are	not	historical facts	and	are	sometimes	identified	by	the	words	"may,"	"will,"	"should,"	"potential,"	"intend,"	"expect,"	"endeavor,"	"seek,"	"anticipate,"	"estimate," "overestimate,"	"underestimate,"	"believe,"	"could,"	"project,"	"predict,"	"continue,"	"target"	or	other	similar	words	or	expressions.	Forward-looking statements	are	based	upon	current	plans,	estimates	and	expectations	that	are	subject	to	risks,	uncertainties	and	assumptions.	Should	one	or	more	of these	risks	or	uncertainties	materialize,	or	should	underlying	assumptions	prove	incorrect,	actual	results	may	vary	materially	from	those	indicated	or anticipated	by	such	forward-looking	statements.	The	inclusion	of	such	statements	should	not	be	regarded	as	a	representation	that	such	plans,	estimates or	expectations	will	be	achieved.	Important	factors	that	could	cause	actual	results	to	differ	materially	from	such	plans,	estimates	or	expectations	include, among	others,	the	risk	factors	in	the	"Risk	Factors"	section	of	Part	1	of	Item	1A	of	this	Form	10-K	and	those	set	forth	from	time-to-time	in	other	filings	by the	Company	with	the	SEC.	These	documents	are	available	through	our	website	or	through	the	SEC's	Electronic	Data	Gathering	and	Analysis	Retrieval (EDGAR)	system	at	http://www.sec.gov.

In	light	of	such	risks	and	uncertainties,	we	caution	you	not	to	place	undue	reliance	on	these	forward-looking	statements.	These	forward-looking statements	speak	only	as	of	the	date	of	this	annual	report,	or	if	earlier,	as	of	the	date	they	were	made.	We	do	not	intend	to,	and	disclaim	any	obligation	to, update	or	revise	any	forward-looking	statements	unless	required	by	securities	law.

# ITEM	7A.	QUANTITATIVE	AND	QUALITATIVE	DISCLOSURES	ABOUT	MARKET	RISK

We	are	exposed	to	certain	market	risks	that	are	inherent	in	our	financial	instruments	and	arise	from	changes	in	interest	rates	and	foreign	currency exchange	rates.	We	may	enter	into	derivative	financial	instrument	transactions	to	manage	or	reduce	market	risk	but	do	not	enter	into	derivative	financial instrument	transactions	for	speculative	purposes.	A	discussion	of	our	primary	market	risk	exposure	in	financial	instruments	is	presented	below.

# INTEREST	RATE	RISK

The	majority	of	our	debt	is	comprised	of	fixed	rate	instruments.	We	are	subject	to	interest	rate	risk	on	our	debt	and	investment	portfolio.	We	may	use interest	rate	swaps	to	manage	the	economic	effect	of	fixed	rate	obligations	associated	with	certain	debt.	There	were	no	outstanding	interest	rate	swap agreements	as	of	December	31,	2017.	The	following	table	sets	forth	our	fixed	rate	long-term	debt,	excluding	capital	leases,	and	the	related	weighted average	interest	rates	by	expected	maturity	dates.

| (In	millions) | 2018 | 2019 | 2020 | 2021 | 2022 | Thereafter | Total	(2) |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| As\tof\tDecember\t31,\t2017 |  |  |  |  |  |  |  |
| Long-term\tdebt\t(1) | $615 | $— | $— | $513 | $1,250 | $4,196 | $6,574 |
| Weighted\taverage\tinterest\trates | 2.15% | —% | —% | 2.47% | 2.87% | 3.88% | 3.42% |

(1) Fair	market	value	of	our	fixed	rate	long-term	debt,	excluding	capital	leases,	was	$7.0	billion	at	December	31, 2017.

(2) Amounts	represent	the	principal	value	of	our	long-term	debt	outstanding	and	related	weighted	average	interest	rates	at	the	end	of	the	respective period.

# FOREIGN	CURRENCY	EXCHANGE	RISK

We	conduct	our	operations	around	the	world	in	a	number	of	different	currencies,	and	we	are	exposed	to	market	risks	resulting	from	fluctuations	in foreign	currency	exchange	rates.	Many	of	our	significant	foreign	subsidiaries	have	designated	the	local	currency	as	their	functional	currency.	As	such, future	earnings	are	subject	to	change	due	to	fluctuations	in	foreign	currency	exchange	rates	when	transactions	are	denominated	in	currencies	other	than our	functional	currencies.

Additionally,	we	buy,	manufacture	and	sell	components	and	products	across	global	markets.	These	activities	expose	us	to	changes	in	foreign currency	exchange	rates,	commodity	prices	and	interest	rates	which	can	adversely	affect	revenue	earned	and	costs	of	our	operating	businesses.	When the	currency	in	which	equipment	is	sold	differs	from	the	primary	currency	of	the	legal	entity	and	the	exchange	rate	fluctuates,	it	will	affect	the	revenue earned	on	the	sale.	These	sales	and	purchase	transactions	also	create	receivables	and	payables	denominated	in	foreign	currencies	and	exposure	to foreign	currency	gains	and	losses	based	on	changes	in	exchange	rates.	Changes	in	the	price	of	raw	materials	used	in	manufacturing	can	affect	the	cost of	manufacturing.	We	use	derivatives	to	mitigate	or	eliminate	these	exposures,	where	appropriate.

We	use	cash	flow	hedging	primarily	to	reduce	or	eliminate	the	effects	of	foreign	currency	exchange	rate	changes	on	purchase	and	sale	contracts. Accordingly,	most	derivative	activity	in	this	category	consists	of	currency	exchange	contracts.	We	had	outstanding	foreign	currency	forward	contracts	with net	notional	amounts	aggregating	$3.3	billion	and	$0.6	billion	to	hedge	exposure	to	currency	fluctuations	in	various	foreign	currencies	at	 December	31, 2017	and	2016,	respectively.	As	of	December	31,	2017,	the	Company	estimates	that	a	1%	appreciation	or	depreciation	in	the	U.S.	dollar	would	result	in an	impact	of	approximately	$10	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	14.	Financial	Instruments"	of	the	Notes	to Consolidated	and	Combined	Financial	Statements	in	Item	8	herein,	which	has	additional	details	on	our	strategy.

# ITEM	8.	FINANCIAL	STATEMENTS	AND	SUPPLEMENTARY	DATA

# Management's	Report	on	Internal	Control	Over	Financial	Reporting

Our	management	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over	our	financial	reporting,	as	such	term	is	defined	in Exchange	Act	Rules	13a-15(f).	Our	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability of	financial	reporting	and	the	preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.

Under	the	supervision	and	with	the	participation	of	our	management,	including	our	principal	executive	officer	and	principal	financial	officer,	we assessed	the	effectiveness	of	our	internal	control	over	financial	reporting	based	on	the	2013	framework	in	Internal	Control	-	Integrated	Framework	issued by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.	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,	2017.	This	conclusion	is	based	on	the recognition	that	there	are	inherent	limitations	in	all	systems	of	internal	control.	Because	of	the	inherent	limitations	of	internal	control	over	financial reporting,	including	the	possibility	of	collusion	or	improper	management	override	of	controls,	material	misstatements	due	to	error	or	fraud	may	not	be prevented	or	detected	on	a	timely	basis.	Also,	projections	of	any	evaluation	of	effectiveness	to	future	periods	are	subject	to	the	risk	that	controls	may become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	the	policies	or	procedures	may	deteriorate.

KPMG	LLP,	the	Company's	independent	registered	public	accounting	firm,	has	issued	an	attestation	report	on	the	effectiveness	of	the	Company's internal	control	over	financial	reporting.

/s/	LORENZO	SIMONELLI Lorenzo	Simonelli Chairman,	President	and

Chief	Executive	Officer

Houston,	Texas

/s/	BRIAN	WORRELL Brian	Worrell

Chief	Financial	Officer

/s/	KURT	CAMILLERI Kurt	Camilleri

Vice	President,	Controller	and	Chief

Accounting	Officer

# REPORT	OF	INDEPENDENT	REGISTERED	PUBLIC	ACCOUNTING	FIRM

# To	the	Stockholders	and	Board	of	Directors

# Opinion	on	the	Consolidated	and	Combined	Financial	Statements

We	have	audited	the	accompanying	consolidated	and	combined	statement	of	financial	position	of	Baker	Hughes,	a	GE	company	and	subsidiaries (the	"Company")	as	of	December	31,	2017,	the	related	consolidated	and	combined	statements	of	income	(loss),	comprehensive	income	(loss),	changes	in equity,	and	cash	flows	for	the	year	ended	December	31,	2017,	and	the	related	notes	(collectively,	the	"consolidated	and	combined	financial	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,	2017,	and	the	results	of	its	operations	and	its	cash	flows	for	the	year	ended	December	31,	2017,	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)	("PCAOB"),	the Company's	internal	control	over	financial	reporting	as	of	December	31,	2017,	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	23,	2018	expressed	an unqualified	opinion	on	the	effectiveness	of	the	Company's	internal	control	over	financial	reporting.

# Basis	for	Opinion

These	consolidated	and	combined	financial	statements	are	the	responsibility	of	the	Company's	management.	Our	responsibility	is	to	express	an opinion	on	these	consolidated	and	combined	financial	statements	based	on	our	audits.	We	are	a	public	accounting	firm	registered	with	the	PCAOB	and are	required	to	be	independent	with	respect	to	the	Company	in	accordance	with	the	U.S.	federal	securities	laws	and	the	applicable	rules	and	regulations of	the	Securities	and	Exchange	Commission	and	the	PCAOB.

We	conducted	our	audits	in	accordance	with	the	standards	of	the	PCAOB.	Those	standards	require	that	we	plan	and	perform	the	audit	to	obtain reasonable	assurance	about	whether	the	consolidated	and	combined	financial	statements	are	free	of	material	misstatement,	whether	due	to	error	or fraud.	Our	audits	included	performing	procedures	to	assess	the	risks	of	material	misstatement	of	the	consolidated	and	combined	financial	statements, whether	due	to	error	or	fraud,	and	performing	procedures	that	respond	to	those	risks.	Such	procedures	included	examining,	on	a	test	basis,	evidence regarding	the	amounts	and	disclosures	in	the	consolidated	and	combined	financial	statements.	Our	audits	also	included	evaluating	the	accounting principles	used	and	significant	estimates	made	by	management,	as	well	as	evaluating	the	overall	presentation	of	the	consolidated	and	combined	financial statements.	We	believe	that	our	audits	provide	a	reasonable	basis	for	our	opinion.

# /s/	KPMG	LLP

We	have	served	as	the	Company's	auditor	since	2017.

We	have	audited	the	accompanying	combined	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	for	each	of the	years	in	the	two-year	period	ended	December	31,	2016.	These	combined	financial	statements	are	the	responsibility	of	the	Company's	management. Our	responsibility	is	to	express	an	opinion	on	these	combined	financial	statements	based	on	our	audits.

We	conducted	our	audits	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.	Those	standards	require	that	we	plan	and	perform	the	audit	to	obtain reasonable	assurance	about	whether	the	financial	statements	are	free	of	material	misstatement.	An	audit	includes	examining,	on	a	test	basis,	evidence supporting	the	amounts	and	disclosures	in	the	financial	statements.	An	audit	also	includes	assessing	the	accounting	principles	used	and	significant estimates	made	by	management,	as	well	as	evaluating	the	overall	financial	statement	presentation.	We	believe	that	our	audits	provide	a	reasonable basis	for	our	opinion.

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

Florence,	Italy

# REPORT	OF	THE	INDEPENDENT	REGISTERED	PUBLIC	ACCOUNTING	FIRM

# Opinion	on	Internal	Control	Over	Financial	Reporting

We	have	audited	Baker	Hughes,	a	GE	company	and	subsidiaries'	(the	"Company")	internal	control	over	financial	reporting	as	of	December	31,	2017, 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,	2017, 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)	("PCAOB"),	the consolidated	and	combined	statement	of	financial	position	of	the	Company	as	of	December	31,	2017,	the	related	consolidated	and	combined	statements of	income	(loss),	comprehensive	income	(loss),	changes	in	equity,	and	cash	flows	for	the	year	ended	December	31,	2017,	and	the	related	notes (collectively,	the	"consolidated	and	combined	financial	statements"),	and	our	report	dated	February	23,	2018	expressed	an	unqualified	opinion	on	those consolidated	and	combined	financial	statements.

The	Company's	management	is	responsible	for	maintaining	effective	internal	control	over	financial	reporting	and	for	its	assessment	of	the effectiveness	of	internal	control	over	financial	reporting,	included	in	the	accompanying	Management's	Report	on	Internal	Control	Over	Financial Reporting.	Our	responsibility	is	to	express	an	opinion	on	the	Company's	internal	control	over	financial	reporting	based	on	our	audit.	We	are	a	public accounting	firm	registered	with	the	PCAOB	and	are	required	to	be	independent	with	respect	to	the	Company	in	accordance	with	the	U.S.	federal securities	laws	and	the	applicable	rules	and	regulations	of	the	Securities	and	Exchange	Commission	and	the	PCAOB.

We	conducted	our	audit	in	accordance	with	the	standards	of	the	PCAOB.	Those	standards	require	that	we	plan	and	perform	the	audit	to	obtain reasonable	assurance	about	whether	effective	internal	control	over	financial	reporting	was	maintained	in	all	material	respects.	Our	audit	of	internal	control over	financial	reporting	included	obtaining	an	understanding	of	internal	control	over	financial	reporting,	assessing	the	risk	that	a	material	weakness	exists, and	testing	and	evaluating	the	design	and	operating	effectiveness	of	internal	control	based	on	the	assessed	risk.	Our	audit	also	included	performing	such other	procedures	as	we	considered	necessary	in	the	circumstances.	We	believe	that	our	audit	provides	a	reasonable	basis	for	our	opinion.

# Definition	and	Limitations	of	Internal	Control	Over	Financial	Reporting

A	company's	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial reporting	and	the	preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.	A	company's internal	control	over	financial	reporting	includes	those	policies	and	procedures	that	(1)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail, accurately	and	fairly	reflect	the	transactions	and	dispositions	of	the	assets	of	the	company;	(2)	provide	reasonable	assurance	that	transactions	are recorded	as	necessary	to	permit	preparation	of	financial	statements	in	accordance	with	generally	accepted	accounting	principles,	and	that	receipts	and expenditures	of	the	company	are	being	made	only	in	accordance	with	authorizations	of	management	and	directors	of	the	company;	and	(3)	provide reasonable	assurance	regarding	prevention	or	timely	detection	of	unauthorized	acquisition,	use,	or	disposition	of	the	company's	assets	that	could	have	a material	effect	on	the	financial	statements.

Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Also,	projections	of	any evaluation	of	effectiveness	to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the degree	of	compliance	with	the	policies	or	procedures	may	deteriorate.

# CONSOLIDATED	AND	COMBINED	STATEMENTS	OF	INCOME	(LOSS)

|  |  | Year	Ended	December	31, | Year	Ended	December	31, |
| :--- | :--- | :--- | :--- |
| (In\tmillions,\texcept\tper\tshare\tamounts) | 2017 | 2016 | 2015 |
| Revenue: |  |  |  |
| Sales\tof\tgoods | $10,898 | $9,488 | $12,353 |
| Sales\tof\tservices | 6,361 | 3,781 | 4,335 |
| Total\trevenue | 17,259 | 13,269 | 16,688 |
| Costs\tand\texpenses: |  |  |  |
| Cost\tof\tgoods\tsold | 9,402 | 7,816 | 9,271 |
| Cost\tof\tservices\tsold | 4,644 | 2,307 | 2,922 |
| Selling,\tgeneral\tand\tadministrative\texpenses | 2,535 | 1,938 | 2,115 |
| Restructuring,\timpairment\tand\tother | 412 | 516 | 411 |
| Goodwill\timpairment | — | — | 2,080 |
| Merger\tand\trelated\tcosts | 373 | 33 | 27 |
| Total\tcosts\tand\texpenses | 17,366 | 12,610 | 16,826 |
| Operating\tincome\t(loss) | (107) | 659 | (138) |
| Other\tnon\toperating\tincome,\tnet | 78 | 27 | 100 |
| Interest\texpense,\tnet | (131) | (102) | (120) |
| Income\t(loss)\tbefore\tincome\ttaxes\tand\tequity\tin\tloss\tof\taffiliate | (160) | 584 | (158) |
| Equity\tin\tloss\tof\taffiliate | (11) | — | — |
| Provision\tfor\tincome\ttaxes | (71) | (250) | (473) |
| Net\tincome\t(loss) | (242) | 334 | (631) |
| Less:\tNet\tincome\t(loss)\tattributable\tto\tGE\tO&amp;G\tpre-merger | 109 | 403 | (606) |
| Less:\tNet\tloss\tattributable\tto\tnoncontrolling\tinterests | (278) | (69) | (25) |
| Net\tloss\tattributable\tto\tBaker\tHughes,\ta\tGE\tcompany | $(73) | $— | $— |
| Per\tshare\tamounts:\nBasic\tand\tdiluted\tloss\tper\tClass\tA\tcommon\tshare | $(0.17) |  |  |
| Cash\tdividend\tper\tClass\tA\tcommon\tshare | $0.35 |  |  |
| Special\tdividend\tper\tClass\tA\tcommon\tshare | $17.50 |  |  |

See	accompanying	Notes	to	Consolidated	and	Combined	Financial	Statements

# CONSOLIDATED	AND	COMBINED	STATEMENTS	OF	COMPREHENSIVE	INCOME	(LOSS)

|  | Year	Ended	December	31, | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
| (In\tmillions) | 2017 | 2016 | 2015 |
| Net\tincome\t(loss) | $(242) | $334 | $(631) |
| Less:\tNet\tincome\t(loss)\tattributable\tto\tGE\tO&amp;G\tpre-merger | 109 | 403 | (606) |
| Less:\tNet\tloss\tattributable\tto\tnoncontrolling\tinterests | (278) | (69) | (25) |
| Net\tloss\tattributable\tto\tBaker\tHughes,\ta\tGE\tcompany | (73) | — | — |
| Other\tcomprehensive\t(loss)\tincome: |  |  |  |
| Investment\tsecurities | 4 | — | — |
| Foreign\tcurrency\ttranslation\tadjustments | (3) | (422) | (617) |
| Cash\tflow\thedges | 12 | (8) | (2) |
| Benefit\tplans | 55 | 54 | 40 |
| Other\tcomprehensive\tincome\t(loss) | 68 | (376) | (579) |
| Less:\tOther\tcomprehensive\tloss\tattributable\tto\tGE\tO&amp;G\tpre-merger | (62) | (362) | (568) |
| Less:\tOther\tcomprehensive\tincome\t(loss)\tattributable\tto\tnoncontrolling\tinterests | 83 | (14) | (11) |
| Other\tcomprehensive\tincome\tattributable\tBaker\tHughes,\ta\tGE\tcompany | 47 | — | — |
| Comprehensive\tloss | (174) | (42) | (1,210) |
| Less:\tComprehensive\tincome\t(loss)\tattributable\tto\tGE\tO&amp;G\tpre-merger | 47 | 41 | (1,174) |
| Less:\tComprehensive\tloss\tattributable\tto\tnoncontrolling\tinterests | (195) | (83) | (36) |
| Comprehensive\tloss\tattributable\tto\tBaker\tHughes,\ta\tGE\tcompany | $(26) | $— | $— |

See	Notes	to	Consolidated	and	Combined	Financial	Statements

# CONSOLIDATED	AND	COMBINED	STATEMENTS	OF	FINANCIAL	POSITION

|  | December	31, |  |
| :--- | :--- | :--- |
| (In\tmillions,\texcept\tpar\tvalue) | 2017 | 2016 |
| ASSETS |  |  |
| Current\tAssets: |  |  |
| Cash\tand\tequivalents\t(1) | $7,023 | $981 |
| Current\treceivables,\tnet | 6,014 | 2,563 |
| Inventories,\tnet | 4,590 | 3,224 |
| All\tother\tcurrent\tassets | 872 | 633 |
| Total\tcurrent\tassets | 18,499 | 7,401 |
| Property,\tplant\tand\tequipment,\tless\taccumulated\tdepreciation | 6,959 | 2,325 |
| Goodwill | 19,927 | 6,680 |
| Other\tintangible\tassets,\tnet | 6,358 | 2,449 |
| Contract\tassets | 2,745 | 1,967 |
| All\tother\tassets | 2,080 | 573 |
| Deferred\tincome\ttaxes | 482 | 326 |
| Total\tassets | $57,050 | $21,721 |
| LIABILITIES\tAND\tEQUITY |  |  |
| Current\tLiabilities: |  |  |
| Accounts\tpayable | $3,377 | $1,898 |
| Short-term\tdebt\tand\tcurrent\tportion\tof\tlong-term\tdebt\t^(1) | 2,037 | 239 |
| Progress\tcollections | 1,381 | 1,596 |
| All\tother\tcurrent\tliabilities | 2,102 | 1,201 |
| Total\tcurrent\tliabilities | 8,897 | 4,934 |
| Long-term\tdebt | 6,312 | 38 |
| Deferred\tincome\ttaxes | 524 | 880 |
| Liabilities\tfor\tpensions\tand\tother\temployee\tbenefits | 1,172 | 519 |
| All\tother\tliabilities | 972 | 495 |
| Equity: |  |  |
| December\t31,\t2017 | — | — |
| December\t31,\t2017 | — | — |
| Capital\tin\texcess\tof\tpar\tvalue | 15,483 | — |
| Parent's\tnet\tinvestment | — | 16,582 |
| Retained\tloss | (73) | — |
| Accumulated\tother\tcomprehensive\tloss | (701) | (1,894) |
| Baker\tHughes,\ta\tGE\tcompany\tequity | 14,709 | 14,688 |
| Noncontrolling\tinterests | 24,464 | 167 |
| Total\tequity | 39,173 | 14,855 |
| Total\tliabilities\tand\tequity | $57,050 | $21,721 |

(1) Total	assets	include	$1,124	million	of	assets	held	on	behalf	of	GE,	of	which	$997	million	is	cash	and	equivalents	and	$127	million	is	investment	securities	at December	31,	2017	and	a	corresponding	amount	of	liability	is	reported	in	short-term	borrowings.	See	"Note	16.	Related	Party	Transactions"	for	further details.

# CONSOLIDATED	AND	COMBINED	STATEMENTS	OF	CHANGES	IN	EQUITY

| (In	millions,	except	per	share	amounts) | Class	A<br>Common	Stock | Class	B<br>Common	Stock | Capital	in<br>Excess	of	Par<br>Value | Parent's	Net<br>Investment | Retained	Loss | Accumulated	Other<br>Comprehensive	Loss | Non-<br>controlling<br>Interests | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tDecember\t31,\t2014 | $— | $— | $— | $17,169 | $— | $(964) | $181 | $16,386 |
| Comprehensive\tincome: |  |  |  |  |  |  |  |  |
| Net\tloss |  |  |  | (606) |  |  | (25) | (631) |
| Other\tcomprehensive\tloss |  |  |  |  |  | (568) | (11) | (579) |
| Changes\tin\tParent's\tnet\tinvestment |  |  |  | (643) |  |  |  | (643) |
| Net\tactivity\trelated\tto\tnoncontrolling\tinterests |  |  |  |  |  |  | 12 | 12 |
| Balance\tat\tDecember\t31,\t2015 | $— | $— | $— | $15,920 | $— | $(1,532) | $157 | $14,545 |
| Comprehensive\tincome: |  |  |  |  |  |  |  |  |
| Net\tincome\t(loss) |  |  |  | 403 |  |  | (69) | 334 |
| Other\tcomprehensive\tloss |  |  |  |  |  | (362) | (14) | (376) |
| Changes\tin\tParent's\tnet\tinvestment |  |  |  |  |  |  |  |  |
|  |  |  |  | 259 |  |  |  | 259 |
| Net\tactivity\trelated\tto\tnoncontrolling\tinterests |  |  |  |  |  |  | 93 | 93 |
| Balance\tat\tDecember\t31,\t2016 | $— | $— | $— | $16,582 | $— | $(1,894) | $167 | $14,855 |
| Comprehensive\tincome: |  |  |  |  |  |  |  |  |
| Net\tincome |  |  |  | 109 |  |  | 4 | 113 |
| Other\tcomprehensive\tincome\t(loss) |  |  |  |  |  | (62) | 4 | (58) |
| Changes\tin\tParent's\tnet\tinvestment |  |  |  | 803 |  | (13) |  | 790 |
| Net\tactivity\trelated\tto\tnoncontrolling\tinterests |  |  |  |  |  |  | 4 | 4 |
| Cash\tcontribution\treceived\tfrom\tGE |  |  |  | 7,400 |  |  |  | 7,400 |
| Conversion\tof\tParent's\tnet\tinvestment\tinto |  |  |  |  |  |  |  |  |
| noncontrolling\tinterest\tand\tissuance\tof\tClass\tB |  |  |  |  |  |  |  |  |
| common\tstock |  |  |  | (24,894) |  |  | 24,894 | — |
| Issuance\tof\tClass\tA\tcommon\tstock\ton\tacquisition\tof\nBaker\tHughes |  |  | 24,798 |  |  |  | 76 | 24,874 |
| Special\tdividend\t($17.5\tper\tshare) |  |  | (7,498) |  |  |  |  | (7,498) |
| Reallocation\tof\tequity\tbased\ton\townership\tof\tGE\tand\nprevious\tBaker\tHughes\tstockholders |  |  | (1,451) |  |  | 1,234 | 217 | — |
| Activity\tafter\tbusiness\tcombination\tof\tJuly\t3, |  |  |  |  |  |  |  |  |
| 2017: |  |  |  |  |  |  |  |  |
| Net\tloss |  |  |  |  | (73) |  | (282) | (355) |
| Other\tcomprehensive\tincome |  |  |  |  |  | 47 | 79 | 126 |
| Stock-based\tcompensation\tcost |  |  | 37 |  |  |  |  | 37 |
| Cash\tdividends\t($0.35\tper\tshare) |  |  | (155) |  |  |  | (251) | (406) |
| Net\tactivity\trelated\tto\tnoncontrolling\tinterests |  |  | (61) |  |  | (13) | (134) | (208) |
| Repurchase\tand\tcancellation\tof\tClass\tA\tand\tClass\tB\ncommon\tstock |  |  | (187) |  |  |  | (314) | (501) |
| Balance\tat\tDecember\t31,\t2017 | $— | $— | $15,483 | $— | $(73) | $(701) | $24,464 | $39,173 |

# CONSOLIDATED	AND	COMBINED	STATEMENTS	OF	CASH	FLOWS

|  | Year	Ended	December	31, | Year	Ended	December	31, | Year	Ended	December	31, |
| :--- | :--- | :--- | :--- |
| (In\tmillions) | 2017 | 2016 | 2015 |
| Cash\tflows\tfrom\toperating\tactivities: |  |  |  |
| Net\tincome\t(loss) | $(242) | $334 | $(631) |
| Adjustments\tto\treconcile\tnet\tincome\t(loss)\tto\tnet\tcash\tflows\tfrom\toperating\tactivities: |  |  |  |
| Depreciation\tand\tamortization | 1,103 | 550 | 530 |
| Goodwill\timpairment | — | — | 2,080 |
| Provision\tfor\tdeferred\tincome\ttaxes | (304) | 39 | (96) |
| Changes\tin\toperating\tassets\tand\tliabilities: |  |  |  |
| Current\treceivables | (1,190) | 278 | 469 |
| Inventories | 392 | 345 | 442 |
| Accounts\tpayable | 303 | (256) | (450) |
| Progress\tcollections | (232) | (714) | (867) |
| Deferred\tcharges | (570) | (292) | (87) |
| Other\toperating\titems,\tnet | (59) | (22) | (113) |
| Net\tcash\tflows\tfrom\t(used\tin)\toperating\tactivities | (799) | 262 | 1,277 |
| Cash\tflows\tfrom\tinvesting\tactivities: |  |  |  |
| Expenditures\tfor\tcapital\tassets | (665) | (424) | (607) |
| Proceeds\tfrom\tdisposal\tof\tassets | 172 | 20 | 30 |
| Proceeds\tfrom\tbusiness\tdispositions | 20 | — | 181 |
| Net\tcash\tpaid\tfor\tacquisitions | (3,365) | (1) | (86) |
| Other\tinvesting\titems,\tnet | (292) | (67) | 16 |
| Net\tcash\tflows\tused\tin\tinvesting\tactivities | (4,130) | (472) | (466) |
| Cash\tflows\tfrom\tfinancing\tactivities: |  |  |  |
| Net\tborrowings\t(repayments)\tof\tshort-term\tborrowings | (663) | (156) | 177 |
| Proceeds\tfrom\tthe\tissuance\tof\tlong-term\tdebt | 3,928 | — | — |
| Repayments\tof\tlong-term\tdebt | (177) | — | — |
| Net\ttransfer\tfrom\tParent | 1,498 | 191 | (708) |
| Contribution\treceived\tfrom\tGE | 7,400 | — | — |
| Dividends\tpaid | (155) | — | — |
| Distributions\tto\tnoncontrolling\tinterest | (251) | — | — |
| Repurchase\tof\tClass\tA\tcommon\tstock | (174) | — | — |
| Repurchase\tof\tGE\tcommon\tunits\tby\tBHGE\tLLC | (303) | — | — |
| Other\tfinancing\titems,\tnet | (184) | (137) | 16 |
| Net\tcash\tflows\tfrom\t(used\tin)\tfinancing\tactivities | 10,919 | (102) | (515) |
| Effect\tof\tcurrency\texchange\trate\tchanges\ton\tcash\tand\tequivalents | 52 | (139) | (254) |
| Increase\t(decrease)\tin\tcash\tand\tequivalents | 6,042 | (451) | 42 |
| Cash\tand\tequivalents,\tbeginning\tof\tperiod | 981 | 1,432 | 1,390 |
| Cash\tand\tequivalents,\tend\tof\tperiod | $7,023 | $981 | $1,432 |
| Supplemental\tcash\tflows\tdisclosures: |  |  |  |
| Income\ttaxes\tpaid,\tnet\tof\trefunds | $230 | $317 | $264 |
| Interest\tpaid | $109 | $55 | $52 |

# Notes	to	Consolidated	and	Combined	Financial	Statements

# NOTE	1.	BASIS	OF	PRESENTATION	AND	SUMMARY	OF	SIGNIFICANT	ACCOUNTING	POLICIES

# DESCRIPTION	OF	THE	BUSINESS

Baker	Hughes,	a	GE	company	(the	Company,	BHGE,	we,	us,	or	our),	was	formed	on	October	28,	2016,	for	the	purpose	of	facilitating	the combination	of	Baker	Hughes	and	GE	O&G.	BHGE	is	a	world-leading,	fullstream	oilfield	technology	provider	that	has	a	unique	mix	of	equipment	and service	capabilities.	We	conduct	business	in	more	than	120	countries	and	employ	over	64,000	employees.

# BASIS	OF	PRESENTATION

On	July	3,	2017,	we	closed	our	previously	announced	business	combination	(the	Transactions)	to	combine	GE	O&G	and	Baker	Hughes	(refer	to "Note	2.	Business	Acquisition"	for	further	details	on	the	Transactions).	As	a	result	of	the	Transactions,	the	Company	became	the	holding	company	of	the combined	businesses	of	Baker	Hughes	and	GE	O&G.	Substantially	all	of	the	business	of	GE	O&G	and	of	Baker	Hughes	were	transferred	to	a	subsidiary of	the	Company,	Baker	Hughes,	a	GE	company,	LLC	(BHGE	LLC),	on	July	3,	2017.	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.	Accordingly,	we	consolidate	the	financial	results	of	BHGE	LLC	and	report	a	noncontrolling	interest	in	our	consolidated	and	combined	financial statements	for	the	economic	interest	in	BHGE	LLC	not	held	by	us.	We	consider	BHGE	LLC	to	be	a	consolidated	variable	interest	entity	(VIE).	We	are	a holding	company	and	have	no	material	assets	other	than	our	ownership	interest	in	BHGE	LLC	and	certain	intercompany	and	tax	related	balances.	BHGE 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.	The	current	year	results,	and	balances,	may	not	be	comparable	to	prior	years	as	the	current	year	includes	the	results	of Baker	Hughes	from	July	3,	2017.

The	accompanying	consolidated	and	combined	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 annual	financial	information.	All	intercompany	accounts	and	transactions	have	been	eliminated.

The	Company's	financial	statements	have	been	prepared	on	a	consolidated	basis,	effective	July	3,	2017.	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	subsequent	periods	will	also	be	presented	on	a	consolidated	basis.	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	and	contributed	to	BHGE	LLC	as	part	of	the	Transactions.	Additionally,	it	also	includes	certain assets,	liabilities	and	results	of	operations	of	other	businesses	of	GE	that	were	also	contributed	to	BHGE	LLC	as	part	of	the	Transactions	on	a	fully retrospective	basis	(in	accordance	with	the	guidance	applicable	to	transactions	between	entities	under	common	control)	based	on	their	carrying	values, as	reflected	in	the	accounting	records	of	GE.	The	consolidated	and	combined	statements	of	income	reflect	intercompany	expense	allocations	made	to	us by	GE	for	certain	corporate	functions	and	for	shared	services	provided	by	GE.	Where	possible,	these	allocations	were	made	on	a	specific	identification basis,	and	in	other	cases,	these	expenses	were	allocated	by	GE	based	on	relative	percentages	of	net	operating	costs	or	some	other	basis	depending	on the	nature	of	the	allocated	cost.	See	"Note	16.	Related	Party	Transactions"	for	further	information	on	expenses	allocated	by	GE.	The	historical	financial results	in	the	consolidated	and	combined	financial	statements	presented	may	not	be	indicative	of	the	results	that	would	have	been	achieved	had	GE	O&G operated	as	a	separate,	stand-alone	entity	during	those	periods.

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.	Merger	and	related	costs	includes	all	costs associated	with	the	Transactions	described	in	Note	2.	Refer	to	"Note	2.	Business	Acquisition"	for	further	details.

In	the	notes	to	the	consolidated	and	combined	financial	statements,	all	dollar	and	share	amounts	in	tabulations	are	in	millions	of	dollars	and	shares, respectively,	unless	otherwise	indicated.	Certain	columns	and	rows	may	not	add	due	to	the	use	of	rounded	numbers.

# SUMMARY	OF	SIGNIFICANT	ACCOUNTING	POLICIES

# Use	of	Estimates

The	preparation	of	financial	statements	in	conformity	with	U.S.	GAAP	requires	management	to	make	estimates	and	judgments	that	affect	the reported	amounts	of	assets	and	liabilities,	disclosure	of	any	contingent	assets	or	liabilities	at	the	date	of	the	financial	statements	and	the	reported amounts	of	revenue	and	expenses	during	the	reporting	period.	We	base	our	estimates	and	judgments	on	historical	experience	and	on	various	other assumptions	and	information	that	we	believe	to	be	reasonable	under	the	circumstances.	Estimates	and	assumptions	about	future	events	and	their	effects cannot	be	perceived	with	certainty,	and	accordingly,	these	estimates	may	change	as	new	events	occur,	as	more	experience	is	acquired,	as	additional information	is	obtained	and	as	our	operating	environment	changes.	While	we	believe	that	the	estimates	and	assumptions	used	in	the	preparation	of	the consolidated	and	combined	financial	statements	are	appropriate,	actual	results	could	differ	from	those	estimates.	Estimates	are	used	for,	but	are	not limited	to,	determining	the	following:	allowance	for	doubtful	accounts	and	inventory	valuation	reserves;	recoverability	of	long-lived	assets,	including revenue	recognition	on	long	term	contracts,	valuation	of	goodwill;	useful	lives	used	in	depreciation	and	amortization;	income	taxes	and	related	valuation allowances;	accruals	for	contingencies;	actuarial	assumptions	to	determine	costs	and	liabilities	related	to	employee	benefit	plans;	stock-based compensation	expense;	valuation	of	derivatives	and	the	fair	value	of	assets	acquired	and	liabilities	assumed	in	acquisitions;	and	expense	allocations	for certain	corporate	functions	and	shared	services	provided	by	GE.

# Foreign	Currency

Assets	and	liabilities	of	non-U.S.	operations	with	a	functional	currency	other	than	the	U.S.	dollar	have	been	translated	into	U.S.	dollars	at	the quarterly	exchange	rates,	and	revenue,	expenses,	and	cash	flows	have	been	translated	at	average	rates	for	the	respective	periods.	Any	resulting translation	gains	and	losses	are	included	in	other	comprehensive	income	(loss).

Gains	and	losses	from	foreign	currency	transactions,	such	as	those	resulting	from	the	settlement	of	receivables	or	payables	in	the	non-functional currency	and	those	resulting	from	remeasurements	of	monetary	items,	are	included	in	the	consolidated	and	combined	statement	of	income	(loss).

# 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.

Associated	companies	are	entities	in	which	we	do	not	have	a	controlling	financial	interest,	but	over	which	we	have	significant	influence,	most	often because	we	hold	a	voting	interest	of	20%	to	50%.	Associated	companies	are	accounted	for	as	equity	method	investments.	Results	of	associated companies	are	presented	on	a	one-line	basis	in	the	caption	"Equity	in	loss	of	affiliate"	in	our	consolidated	and	combined	statements	of	income	(loss). Investments	in,	and	advances	to,	associated	companies	are	presented	on	a	one-line	basis	in	the	caption	"All	other	assets"	in	our	consolidated	and combined	statement	of	financial	position.

# Sales	of	Goods	and	Services

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.	In	situations	where	arrangements	include	customer	acceptance	provisions	based	on	seller	or customer-specified	objective

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.	For	larger	construction	and	equipment	contracts,	we	recognize	sales	based	on	our progress	toward	contract	completion	measured	by	actual	costs	incurred	in	relation	to	our	estimate	of	total	expected	costs.	We	routinely	update	our estimates	of	future	costs	for	agreements	in	process	and	report	any	cumulative	effects	of	such	adjustments	in	current	operations.	We	provide	for	any	loss that	we	expect	to	incur	on	these	agreements	when	that	loss	is	probable.

We	sell	product	services	under	long-term	product	maintenance	agreements,	where	costs	of	performing	services	are	incurred	on	an	other	than straight-line	basis.	We	recognize	related	sales	based	on	the	extent	of	our	progress	toward	completion	measured	by	actual	costs	incurred	in	relation	to	our estimate	of	total	expected	costs.	We	routinely	update	our	estimates	of	future	costs	for	agreements	in	process	and	report	any	cumulative	effects	of	such adjustments	in	current	operations.

For	our	long-term	product	maintenance	agreements,	we	regularly	assess	customer	credit	risk	inherent	in	the	carrying	amounts	of	receivables	and contract	costs	and	estimated	earnings,	including	the	risk	that	contractual	penalties	may	not	be	sufficient	to	offset	our	accumulated	costs	in	the	event	of customer	termination.	We	gain	insight	into	expected	future	utilization	and	cost	trends,	as	well	as	credit	risk,	through	our	knowledge	of	the	installed	base	of equipment	and	the	close	interaction	with	our	customers	that	comes	with	supplying	critical	services	and	parts	over	extended	periods.	Revisions,	after applying	the	cumulative	catch	up	basis	of	accounting,	may	affect	a	product	services	agreement's	total	estimated	profitability	resulting	in	an	adjustment	of earnings.	We	provide	for	probable	losses	when	they	become	evident.

Arrangements	for	the	sale	of	goods	and	services	sometimes	include	multiple	components.	Our	arrangements	with	multiple	components	usually involve	an	upfront	deliverable	of	equipment	and	future	service	deliverables	such	as	installation,	commissioning,	training	or	the	future	delivery	of	ancillary products.	In	most	cases,	the	relative	values	of	the	undelivered	components	are	not	significant	to	the	overall	arrangement	and	are	typically	delivered	within three	to	six	months	after	the	core	product	has	been	delivered.	In	such	agreements,	selling	price	is	determined	for	each	component	and	any	difference between	the	total	of	the	separate	selling	prices	and	total	contract	consideration	(i.e.,	discount)	is	allocated	pro	rata	across	each	of	the	components	in	the arrangement.	The	value	assigned	to	each	component	is	objectively	determined	and	obtained	primarily	from	sources	such	as	the	separate	selling	price	for that	or	a	similar	item	or	from	competitor	prices	for	similar	items.	If	such	evidence	is	not	available,	we	use	our	best	estimate	of	selling	price,	which	is established	consistent	with	the	pricing	strategy	of	the	business	and	considers	product	configuration,	geography,	customer	type,	and	other	market	specific factors.

Research	and	development	costs	are	expensed	as	incurred	and	relate	to	the	research	and	development	of	new	products	and	services.	These	costs amounted	to	$501	million,	$352	million	and	$408	million	for	the	years	ended	December	31,	2017,	2016	and	2015,	respectively.	Research	and development	expenses	were	reported	in	cost	of	goods	sold	and	cost	of	services	sold.

# Cash	and	Equivalents

Short-term	investments	with	original	maturities	of	three	months	or	less	are	included	in	cash	equivalents	unless	designated	as	available-for-sale	and classified	as	investment	securities.

As	of	December	31,	2017	and	December	31,	2016,	$1,190	million	and	$752	million,	respectively,	of	cash	and	equivalents	were	considered	restricted as	they	were	held	in	bank	accounts	and	cannot	be	released,	transferred	or	otherwise	converted	into	a	currency	that	is	regularly	transacted	internationally, due	to	lack	of	market	liquidity,	capital	controls	or	similar	monetary	or	exchange	limitations	limiting	the	flow	of	capital	out	of	the	jurisdiction.	Cash	and equivalents	includes	$997	million	of	cash	at	December	31,	2017	held	on	behalf	of	GE,	of	which	 $764	million	is

restricted,	and	a	corresponding	liability	is	reported	in	short-term	borrowings.	See	"Note	16.	Related	Party	Transactions"	for	further	details.

We	establish	an	allowance	for	doubtful	accounts	based	on	various	factors	including	the	payment	history	and	financial	condition	of	our	debtors	and	the economic	environment.	Provisions	for	doubtful	accounts	are	recorded	based	on	the	aging	status	of	the	debtor	accounts	or	when	it	becomes	evident	that the	debtor	will	not	make	the	required	payments	at	either	contractual	due	dates	or	in	the	future.

# Concentration	of	Credit	Risk

We	grant	credit	to	our	customers	who	primarily	operate	in	the	oil	and	natural	gas	industry.	Although	this	concentration	affects	our	overall	exposure	to credit	risk,	our	current	receivables	are	spread	over	a	diverse	group	of	customers	across	many	countries,	which	mitigates	this	risk.	We	perform	periodic credit	evaluations	of	our	customers'	financial	conditions,	including	monitoring	our	customers'	payment	history	and	current	credit	worthiness	to	manage	this risk.	We	do	not	generally	require	collateral	in	support	of	our	current	receivables,	but	we	may	require	payment	in	advance	or	security	in	the	form	of	a	letter of	credit	or	a	bank	guarantee.

# Inventories

All	inventories	are	stated	at	the	lower	of	cost	or	net	realizable	values	and	they	are	measured	on	a	first-in,	first-out	(FIFO)	basis	or	average	cost	basis. As	necessary,	we	record	provisions	and	maintain	reserves	for	excess,	slow	moving	and	obsolete	inventory.	To	determine	these	reserve	amounts,	we regularly	review	inventory	quantities	on	hand	and	compare	them	to	estimates	of	future	product	demand,	market	conditions,	production	requirements	and technological	developments.

# Property,	Plant	and	Equipment	(PP&E)

Property,	plant	and	equipment	is	initially	stated	at	cost	and	is	depreciated	over	its	estimated	economic	life.	Subsequently,	property,	plant	and equipment	is	measured	at	cost	less	accumulated	depreciation	and	impairment	losses.	We	manufacture	a	substantial	portion	of	our	tools	and	equipment and	the	cost	of	these	items,	which	includes	direct	and	indirect	manufacturing	costs,	is	capitalized	and	carried	in	inventory	until	it	is	completed.

# Other	Intangible	Assets

We	amortize	the	cost	of	other	intangible	assets	over	their	estimated	useful	lives	unless	such	lives	are	deemed	indefinite.	The	cost	of	intangible	assets is	generally	amortized	on	a	straight-line	basis	over	the	asset's	estimated	economic	life.	Amortizable	intangible	assets	are	reviewed	for	impairment whenever	events	or	changes	in	circumstances	indicate	that	the	related	carrying	amounts	may	not	be	recoverable.	In	these	circumstances,	they	are	tested for	impairment	based	on	undiscounted	cash	flows	and,	if	impaired,	written	down	to	fair	value	based	on	either	discounted	cash	flows	or	appraised	values. Intangible	assets	with	indefinite	lives	are	tested	annually	for	impairment	and	written	down	to	fair	value	as	required.	Refer	to	the	Impairment	of	Goodwill and	Other	Long-Lived	Assets	accounting	policy.

# Impairment	of	Goodwill	and	Other	Long-lived	Assets

We	perform	an	annual	impairment	test	of	goodwill	on	a	qualitative	or	quantitative	basis	for	each	of	our	reporting	units	as	of	July	1,	or	more	frequently when	circumstances	indicate	an	impairment	may	exist	at	the	reporting	unit	level.	When	performing	the	annual	impairment	test	we	have	the	option	of	first performing	a	qualitative	assessment	to	determine	the	existence	of	events	and	circumstances	that	would	lead	to	a	determination	that	it	is	more	likely	than not	that	the	fair	value	of	a	reporting	unit	is	less	than	its	carrying	amount.	If	such	a	conclusion	is	reached,	we	would	then	be	required	to	perform	a quantitative	impairment	assessment	of	goodwill.	However,	if	the	assessment	leads	to	a	determination	that	it	is	more	likely	than	not	that	the	fair	value	of	a reporting	unit	is	greater	than	its	carrying	amount,	then	no	further	assessments	are	required.	A	quantitative	assessment	for	the	determination	of impairment	is	made	by	comparing	the	carrying	amount	of	each	reporting	unit	with	its	fair	value,	which	is	generally	calculated	using	a

combination	of	market,	comparable	transaction	and	discounted	cash	flow	approaches.	See	"Note	6.	Goodwill	and	Other	Intangible	Assets"	for	further information	on	valuation	methodology	and	impairment	of	goodwill.

We	review	PP&E,	intangible	assets	and	certain	other	long-lived	assets	for	impairment	whenever	events	or	changes	in	circumstances	indicate	that	the carrying	amount	may	not	be	recoverable	and	at	least	annually	for	indefinite-lived	intangible	assets.	When	testing	for	impairment,	we	group	our	long-lived assets	with	other	assets	and	liabilities	at	the	lowest	level	for	which	identifiable	cash	flows	are	largely	independent	of	the	cash	flows	of	other	assets	and liabilities	(or	asset	group).		The	determination	of	recoverability	is	made	based	upon	the	estimated	undiscounted	future	net	cash	flows.	The	amount	of impairment	loss,	if	any,	is	determined	by	comparing	the	fair	value,	as	determined	by	a	discounted	cash	flow	analysis,	with	the	carrying	value	of	the related	assets.

# Financial	Instruments

Our	financial	instruments	include	cash	and	equivalents,	current	receivables,	investments,	accounts	payables,	short	and	long-term	debt,	and derivative	financial	instruments.

We	monitor	our	exposure	to	various	business	risks	including	commodity	prices	and	foreign	currency	exchange	rates	and	we	regularly	use	derivative financial	instruments	to	manage	these	risks.	At	the	inception	of	a	new	derivative,	we	designate	the	derivative	as	a	hedge	or	we	determine	the	derivative to	be	undesignated	as	a	hedging	instrument.	We	document	the	relationships	between	the	hedging	instruments	and	the	hedged	items,	as	well	as	our	risk management	objectives	and	strategy	for	undertaking	various	hedge	transactions.	We	assess	whether	the	derivatives	that	are	used	in	hedging transactions	are	highly	effective	in	offsetting	changes	in	cash	flows	of	the	hedged	item	at	both	the	inception	of	the	hedge	and	on	an	ongoing	basis.

We	have	a	program	that	utilizes	foreign	currency	forward	contracts	to	reduce	the	risks	associated	with	the	effects	of	certain	foreign	currency exposures.	Under	this	program,	our	strategy	is	to	have	gains	or	losses	on	the	foreign	currency	forward	contracts	mitigate	the	foreign	currency	transaction and	translation	gains	or	losses	to	the	extent	practical.	These	foreign	currency	exposures	typically	arise	from	changes	in	the	value	of	assets	(for	example, current	receivables)	and	liabilities	(for	example,	current	payables)	which	are	denominated	in	currencies	other	than	the	functional	currency	of	the respective	entity.	We	record	all	derivatives	as	of	the	end	of	our	reporting	period	in	our	consolidated	and	combined	statement	of	financial	position	at	fair value.	For	the	forward	contracts	held	as	undesignated	hedging	instruments,	we	record	the	changes	in	fair	value	of	the	forward	contracts	in	our consolidated	and	combined	statements	of	income	along	with	the	change	in	the	fair	value,	related	to	foreign	exchange	movements,	of	the	hedged	item. Changes	in	the	fair	value	of	forward	contracts	designated	as	cash	flow	hedging	instruments	are	recognized	in	other	comprehensive	income	until	the hedged	item	is	recognized	in	earnings.	If	derivatives	designated	as	a	cash	flow	hedge	are	determined	to	be	ineffective,	the	ineffective	portion	of	that derivative's	change	in	fair	value	is	recognized	in	earnings.

# Fair	Value	Measurements

For	financial	assets	and	liabilities	measured	at	fair	value	on	a	recurring	basis,	fair	value	is	the	price	we	would	receive	to	sell	an	asset	or	pay	to transfer	a	liability	in	an	orderly	transaction	with	a	market	participant	at	the	measurement	date.	In	the	absence	of	active	markets	for	the	identical	assets	or liabilities,	such	measurements	involve	developing	assumptions	based	on	market	observable	data	and,	in	the	absence	of	such	data,	internal	information that	is	consistent	with	what	market	participants	would	use	in	a	hypothetical	transaction	that	occurs	at	the	measurement	date.

Observable	inputs	reflect	market	data	obtained	from	independent	sources,	while	unobservable	inputs	reflect	our	market	assumptions.	Preference	is given	to	observable	inputs.	These	two	types	of	inputs	create	the	following	fair	value	hierarchy:

•Level	1	-	Quoted	prices	for	identical	instruments	in	active	markets.

•Level	2	-	Quoted	prices	for	similar	instruments	in	active	markets;	quoted	prices	for	identical	or	similar	instruments	in	markets	that	are	not	active; and	model-derived	valuations	whose	inputs	are	observable	or	whose	significant	value	drivers	are	observable.

•Level	3	-	Significant	inputs	to	the	valuation	model	are	unobservable.

We	maintain	policies	and	procedures	to	value	instruments	using	the	best	and	most	relevant	data	available.	In	addition,	we	perform	reviews	to	assess the	reasonableness	of	the	valuations.	With	regard	to	Level	3	valuations	(including	instruments	valued	by	third	parties),	we	perform	a	variety	of	procedures to	assess	the	reasonableness	of	the	valuations.	Such	reviews	include	an	evaluation	of	instruments	whose	fair	value	change	exceeds	predefined thresholds	(and/or	does	not	change)	and	consider	the	current	interest	rate,	currency	and	credit	environment,	as	well	as	other	published	data,	such	as rating	agency	market	reports	and	current	appraisals.

# Recurring	Fair	Value	Measurements

# Derivatives

When	we	have	Level	1	derivatives,	which	are	traded	either	on	exchanges	or	liquid	over-the-counter	markets,	we	use	closing	prices	for	valuation.	The majority	of	our	derivatives	are	valued	using	internal	models	and	are	included	in	Level	2.	These	internal	models	maximize	the	use	of	market	observable inputs	including	interest	rate	curves	and	both	forward	and	spot	prices	for	currencies	and	commodities.	Derivative	assets	and	liabilities	included	in	Level	2 primarily	represent	foreign	currency	and	commodity	forward	contracts	for	the	Company.

# Investments	in	Debt	and	Equity	Securities

When	available,	we	use	quoted	market	prices	to	determine	the	fair	value	of	investment	securities,	and	they	are	included	in	Level	1.	Level	1	securities primarily	include	publicly	traded	equity	securities.

For	investment	securities	for	which	market	prices	are	observable	for	identical	or	similar	investment	securities	but	not	readily	accessible	for	each	of those	investments	individually	(that	is,	it	is	difficult	to	obtain	pricing	information	for	each	individual	investment	security	at	the	measurement	date),	we	use pricing	models	that	are	consistent	with	what	other	market	participants	would	use.	The	inputs	and	assumptions	to	the	models	are	derived	from	market observable	sources	including:	benchmark	yields,	reported	trades,	broker/dealer	quotes,	issuer	spreads,	benchmark	securities,	bids,	offers,	and	other market-related	data.	Thus,	certain	securities	may	not	be	priced	using	quoted	prices,	but	rather	determined	from	market	observable	information.	These investments	are	included	in	Level	2.	When	we	use	valuations	that	are	based	on	significant	unobservable	inputs	we	classify	the	investment	securities	in Level	3.

# Non-Recurring	Fair	Value	Measurements

Certain	assets	are	measured	at	fair	value	on	a	non-recurring	basis.	These	assets	are	not	measured	at	fair	value	on	an	ongoing	basis,	but	are	subject to	fair	value	adjustments	only	in	certain	circumstances.	These	assets	can	include	long-lived	assets	that	have	been	reduced	to	fair	value	when	they	are held	for	sale,	cost	and	equity	method	investments	and	long-lived	assets	that	are	written	down	to	fair	value	when	they	are	impaired	and	the remeasurement	of	retained	investments	in	formerly	consolidated	subsidiaries	upon	a	change	in	control	that	results	in	a	deconsolidation	of	a	subsidiary,	if we	sell	a	controlling	interest	and	retain	a	noncontrolling	stake	in	the	entity.	Assets	that	are	written	down	to	fair	value	when	impaired	and	retained investments	are	not	subsequently	adjusted	to	fair	value	unless	further	impairment	occurs.

# Cost	and	Equity	Method	Investments

Cost	and	equity	method	investments	are	valued	using	market	observable	data	such	as	quoted	prices	when	available.	When	market	observable	data is	unavailable,	investments	are	valued	using	a	discounted	cash	flow	model,	comparative	market	multiples	or	a	combination	of	both	approaches	as appropriate	and	other	third-party	pricing	sources.

# Long-lived	Assets

Fair	values	of	long-lived	assets,	including	real	estate,	are	primarily	derived	internally	and	are	based	on	observed	sales	transactions	for	similar	assets. In	other	instances,	for	example,	collateral	types	for	which

we	do	not	have	comparable	observed	sales	transaction	data,	collateral	values	are	developed	internally	and	corroborated	by	external	appraisal information.	Adjustments	to	third-party	valuations	may	be	performed	in	circumstances	where	market	comparables	are	not	specific	to	the	attributes	of	the specific	collateral	or	appraisal	information	may	not	be	reflective	of	current	market	conditions	due	to	the	passage	of	time	and	the	occurrence	of	market events	since	receipt	of	the	information.

We	file	U.S.	federal	and	state	income	tax	returns	which	after	the	closing	of	the	Transactions	primarily	includes	our	distributive	share	of	items	of income,	gain,	loss	and	deduction	of	BHGE	LLC	which	is	treated	as	a	partnership	for	U.S.	tax	purposes.	As	such,	BHGE	LLC	will	not	itself	be	subject	to U.S.	federal	income	tax	under	current	U.S.	tax	laws.	Non-U.S.	current	and	deferred	income	taxes	owed	by	the	subsidiaries	of	BHGE	LLC	are	reflected	in the	financial	statements.

Prior	to	the	closing	of	the	Transactions,	the	business	was	included	in	the	consolidated	U.S.	federal,	foreign	and	state	income	tax	returns	of	GE, where	allowable	by	law.			Our	prior	year	current	and	deferred	taxes	were	determined	based	upon	the	separate	return	method	(i.e.,	as	if	we	were	a taxpayer	separate	from	GE).

We	account	for	taxes	under	the	asset	and	liability	method.	Under	this	method,	deferred	income	taxes	are	recognized	for	temporary	differences between	the	financial	statement	and	tax	return	bases	of	assets	and	liabilities	as	well	as	from	net	operating	losses	and	tax	credit	carryforwards,	based	on enacted	tax	rates	expected	to	be	in	effect	when	taxes	actually	are	paid	or	recovered	and	other	provisions	of	the	tax	law.	The	effect	of	a	change	in	tax	laws or	rates	on	deferred	tax	assets	and	liabilities	is	recognized	in	income	in	the	period	in	which	such	change	is	enacted.	Future	tax	benefits	are	recognized	to the	extent	that	realization	of	such	benefits	is	more	likely	than	not,	and	a	valuation	allowance	is	established	for	any	portion	of	a	deferred	tax	asset	that management	believes	may	not	be	realized.

We	provide	U.S.	deferred	taxes	on	our	outside	basis	difference	in	our	investment	in	BHGE	LLC.	In	determining	the	basis	difference,	we	exclude	non- deductible	goodwill	and	the	basis	difference	related	to	certain	foreign	corporations	owned	by	BHGE	LLC	where	the	undistributed	earnings	of	the	foreign corporation	have	been,	or	will	be,	reinvested	indefinitely.

Due	to	the	enactment	of	U.S.	tax	reform,	repatriations	of	foreign	earnings	will	generally	be	free	of	U.S.	federal	tax	but	may	incur	other	taxes,	such	as withholding	or	state	taxes.	Indefinite	reinvestment	is	determined	by	management's	judgment	about	and	intentions	concerning	the	future	operations	of	the Company.	Most	of	these	earnings	have	been	reinvested	in	active	non-U.S.	business	operations.	At	December	31,	2017,	we	have	not	changed	our indefinite	reinvestment	decision	as	a	result	of	U.S.	tax	reform	but	will	reassess	this	during	the	course	of	2018,	accordingly,	we	have	not	provided	income tax	on	such	earnings.	It	is	not	practicable	to	determine	the	income	tax	liability	that	would	be	payable	if	such	earnings	were	not	reinvested	indefinitely.

Significant	judgment	is	required	in	determining	our	tax	expense	and	in	evaluating	our	tax	positions,	including	evaluating	uncertainties.	We	operate	in more	than	120	countries	and	our	tax	filings	are	subject	to	audit	by	the	tax	authorities	in	the	jurisdictions	where	we	conduct	business.	These	audits	may result	in	assessments	of	additional	taxes	that	are	resolved	with	the	tax	authorities	or	through	the	courts.	We	have	provided	for	the	amounts	that	we believe	will	ultimately	result	from	these	proceedings.	We	recognize	uncertain	tax	positions	that	are	"more	likely	than	not"	to	be	sustained	if	the	relevant	tax authority	were	to	audit	the	position	with	full	knowledge	of	all	the	relevant	facts	and	other	information.	For	those	tax	positions	that	meet	this	threshold,	we measure	the	amount	of	tax	benefit	based	on	the	largest	amount	of	tax	benefit	that	has	a	greater	than	50%	chance	of	being	realized	in	a	final	settlement with	the	relevant	authority.	We	classify	interest	and	penalties	associated	with	uncertain	tax	positions	as	income	tax	expense.	The	effects	of	tax adjustments	and	settlements	from	taxing	authorities	are	presented	in	the	combined	financial	statements	in	the	period	they	are	recorded.

Additionally,	as	part	of	U.S.	tax	reform,	the	U.S.	has	enacted	a	tax	on	"base	eroding"	payments	from	the	U.S.	and	a	minimum	tax	on	foreign	earnings (global	intangible	low-taxed	income).	Because	aspects	of	the	new	minimum	tax	and	the	effect	on	our	operations	is	uncertain	and	because	aspects	of	the accounting	rules	associated	with	this

provision	have	not	been	resolved,	we	have	not	made	a	provisional	accrual	for	the	deferred	tax	aspects	of	this	provision	and	consequently	have	not	made an	accounting	policy	election	on	the	deferred	tax	treatment	of	this	tax.

# Environmental	Liabilities

We	are	involved	in	numerous	remediation	actions	to	clean	up	hazardous	waste	as	required	by	federal	and	state	laws.	Liabilities	for	remediation	costs exclude	possible	insurance	recoveries	and,	when	dates	and	amounts	of	such	costs	are	not	known,	are	not	discounted.	When	there	appears	to	be	a	range of	possible	costs	with	equal	likelihood,	liabilities	are	based	on	the	low	end	of	such	range.	It	is	reasonably	possible	that	our	environmental	remediation exposure	will	exceed	amounts	accrued.	However,	due	to	uncertainties	about	the	status	of	laws,	regulations,	technology	and	information	related	to individual	sites,	such	amounts	are	not	reasonably	estimable.	The	determination	of	the	required	accruals	for	remediation	costs	is	subject	to	uncertainty, including	the	evolving	nature	of	environmental	regulations	and	the	difficulty	in	estimating	the	extent	and	type	of	remediation	activity	that	is	necessary.

# ASU	No.	2014-09,	Revenue	from	Contracts	with	Customers

# Background

In	May	2014,	the	Financial	Accounting	Standards	Board	(FASB)	issued	a	new	comprehensive	set	of	revenue	recognition	principles,	Accounting Standards	Update	(ASU)	No.	2014-09,	Revenue	from	Contracts	with	Customers,	that	supersedes	most	existing	U.S.	GAAP	revenue	recognition guidance	(including	ASC	605-35,	Revenue	Recognition	-	Construction-Type	and	Production-Type	Contracts).	The	new	standard	will	become	effective	for annual	reporting	periods	beginning	after	December	15,	2017.	We	adopted	the	standard	on	January	1,	2018	and	will	apply	it	retrospectively	to	all	periods presented	and	will	elect	the	practical	expedient	for	contract	modifications.	Since	the	issuance	of	the	new	standard	by	the	FASB,	we	have	engaged	in	a collaborative	process	with	our	industry	peers	and	worked	with	standard	setters	on	important	interpretive	matters	with	the	objective	of	ensuring consistency	in	the	application	of	the	standard.

# Change	in	Timing	and	Presentation,	No	Impact	to	Cash	or	Economics

The	new	standard	requires	companies	to	identify	contractual	performance	obligations	and	determine	whether	revenue	should	be	recognized	at	a point	in	time	or	over	time	based	on	when	control	of	goods	and	services	transfer	to	a	customer.	As	a	result,	we	expect	changes	in	the	presentation	of	our financial	statements,	including:	(1)	timing	of	revenue	recognition,	and	(2)	changes	in	classification	between	revenue	and	costs.	The	new	standard	will have	no	cash	impact	and,	as	such,	does	not	affect	the	economics	of	our	underlying	customer	contracts.	The	effect	of	applying	the	new	guidance	to	our existing	book	of	contracts	will	result	in	lower	reported	earnings	in	2018	(and	comparative	periods	previously	reported)	and	in	the	early	years	after adoption.	However,	we	expect	to	experience	an	increase	in	reported	earnings,	on	that	existing	book	of	contracts,	as	they	mature.

# Current	Estimate	of	Financial	Statement	Effect

We	adopted	the	new	standard	on	January	1,	2018.	When	we	report	our	2018	results,	the	comparative	results	for	2017	and	2016	will	be	updated	to reflect	the	application	of	the	requirements	of	the	new	standard	to	these	periods.		Based	on	our	assessment	and	best	estimates	to	date,	we	expect	an after-tax	reduction	to	our	January	1,	2016	retained	earnings	balance	of	approximately	$0.4	billion,	with	an	estimated	after-tax	reduction	of	$0.1	billion	and $0.1	billion	on	our	2016	and	2017	earnings,	respectively.	These	adjustments	primarily	relate	to	the	timing	of	revenue	recognition	on	our	long-term	product service	agreements.	Beyond	those	effects,	we	expect	application	of	the	new	guidance	will	result	in	increases	and	decreases	in	revenue	within	our segments,	which	will	largely	offset	and	will	be	immaterial	at	a	total	Company	level.	Following	adoption	in	2018,	our	books	and	records	will	only	reflect	the results	as	required	under	the	new	standard	limiting	our	ability	to	estimate	the	effect	of	the	standard	on	our	earnings.	Given	the	inherent	difficulty	in	this ongoing	estimation	of	the	effect	of	the	standard	on	any	future	periods,	we	do	not	plan	to	continue	to	assess	the	effect	on	2018.

As	discussed	above,	we	anticipate	a	dilutive	effect	of	the	new	standard	in	the	year	of	adoption	consistent	with	the	effect	to	the	restated	2016	and 2017	results	and	the	effect	will	be	less	dilutive	for	years	after	initial	adoption.	However,	this	expectation	is	based	on	many	variables,	including	underlying business	performance,	which	are	subject	to	change,	making	the	effect	of	the	standard	on	future	periods	difficult	to	estimate.	Importantly,	application	of	the new	guidance	has	no	effect	on	the	cash	we	expect	to	receive	nor	the	economics	of	these	contracts.

In	February	2016,	the	FASB	issued	ASU	No.	2016-02,	 Leases.	The	new	standard	establishes	a	right-of-use	(ROU)	model	that	requires	a	lessee	to record	a	ROU	asset	and	a	lease	liability	on	the	balance	sheet	for	all	leases	with	terms	longer	than	12	months.	Leases	will	be	classified	as	either	finance or	operating,	with	classification	affecting	the	pattern	of	expense	recognition.	Similarly,	lessors	will	be	required	to	classify	leases	as	sales-type,	finance	or operating,	with	classification	affecting	the	pattern	of	income	recognition.	Classification	for	both	lessees	and	lessors	will	be	based	on	an	assessment	of whether	risks	and	rewards	as	well	as	substantive	control	have	been	transferred	through	a	lease	contract.	The	new	standard	is	effective	for	fiscal	years beginning	after	December	15,	2018,	including	interim	periods	within	those	fiscal	years,	with	early	adoption	permitted.	A	modified	retrospective	transition approach	is	required	for	leases	existing	at,	or	entered	into	after,	the	beginning	of	the	earliest	comparative	period	presented	in	the	financial	statements, with	certain	practical	expedients	available.	While	we	continue	to	evaluate	the	effect	of	the	standard	on	our	ongoing	financial	reporting,	we	anticipate	that the	adoption	of	the	ASU	may	materially	affect	our	consolidated	and	combined	financial	statements.

# ASU	No.	2016-16,	Accounting	for	Income	Taxes:	Intra-Entity	Asset	Transfers	of	Assets	Other	than	Inventory

In	October	2016,	the	FASB	issued	ASU	No.	2016-16,	 Accounting	for	Income	Taxes:	Intra-Entity	Asset	Transfers	of	Assets	Other	than	Inventory.	The ASU	eliminates	the	deferral	of	tax	effects	of	intra-entity	asset	transfers	other	than	inventory.	As	a	result,	the	tax	expense	from	the	intercompany	sale	of assets,	other	than	inventory,	and	associated	changes	to	deferred	taxes	will	be	recognized	when	the	sale	occurs	even	though	the	pre-tax	effects	of	the transaction	have	not	been	recognized.	The	new	standard	is	effective	for	annual	periods	beginning	after	December	15,	2017,	and	interim	periods	within those	annual	periods.	The	effect	of	the	adoption	of	the	standard	will	depend	on	the	nature	and	amount	of	future	transactions	but	is	currently	expected	as an	increase	to	retained	earnings	of	approximately	$0.3	billion.	Future	earnings	will	be	reduced	in	total	by	this	amount.	The	effect	of	the	change	on	future transactions	will	depend	on	the	nature	and	amount	of	future	transactions	as	it	will	affect	the	timing	of	recognition	of	both	tax	expenses	and	tax	benefits, with	no	change	in	the	associated	cash	flows.

# ASU	No.	2017-07,	Improving	the	Presentation	of	Net	Periodic	Pension	Cost	and	Net	Periodic	Postretirement	Benefit	Cost

In	March	2017,	the	FASB	issued	ASU	No.	2017-07, Improving	the	Presentation	of	Net	Periodic	Pension	Cost	and	Net	Periodic	Postretirement Benefit	Cost,	which	changes	the	income	statement	presentation	of	net	periodic	benefit	cost	by	requiring	separation	between	the	service	cost	component and	all	other	components.	The	service	cost	component	is	required	to	be	presented	as	an	operating	expense	with	other	similar	compensation	costs	arising for	services	rendered	by	the	pertinent	employees	during	the	period.	The	non-operating	components	must	be	presented	outside	of	income	from operations.	This	pronouncement	is	effective	for	annual	reporting	periods	beginning	after	December	15,	2017,	and	the	presentation	disclosure	should	be applied	using	a	retrospective	approach.	Early	adoption	is	permitted.	We	adopted	this	standard	on	January	1,	2018.	The	effect	of	the	adoption	of	this standard	will	not	have	a	material	impact	on	our	consolidated	and	combined	financial	statement.

All	other	new	accounting	pronouncements	that	have	been	issued	but	not	yet	effective	are	currently	being	evaluated	and	at	this	time	are	not	expected to	have	a	material	impact	on	our	financial	position	or	results	of	operations.

# NOTE	2.	BUSINESS	ACQUISITION

On	July	3,	2017,	we	closed	the	Transactions	to	combine	GE	O&G	and	Baker	Hughes,	creating	a	world-leading,	fullstream	oilfield	technology	provider that	has	a	unique	mix	of	equipment	and	service	capabilities.	The	Transactions	were	executed	using	a	partnership	structure,	pursuant	to	which	GE	O&G and	Baker	Hughes	each

contributed	their	operating	assets	to	a	newly	formed	partnership,	BHGE	LLC.	As	a	partnership,	BHGE	LLC will	not	itself	be	subject	to	U.S.	federal	income	tax	under	current	U.S.	tax	laws.	BHGE	LLC's	foreign	subsidiaries,	however,	are	expected	to	incur	current and	deferred	foreign	income	taxes.	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.	GE	holds	its	voting	interest	through	our	Class	B	common stock	and	its	economic	interest	through	a	corresponding	number	of	common	units	of	BHGE	LLC.	Former	Baker	Hughes	stockholders	immediately	after the	completion	of	the	Transactions	also	received	a	special	dividend	of	$17.50	per	share	paid	by	the	Company	to	holders	of	record	of	the	Company's	Class A	common	stock.	GE	contributed	$7.4	billion	to	BHGE	LLC	to	fund	substantially	all	of	the	special	dividend.

Prior	to	the	Transactions,	shares	of	Baker	Hughes	common	stock	were	registered	pursuant	to	Section	12(b)	of	the	Securities	Exchange	Act	of	1934, as	amended	(the	Exchange	Act)	and	listed	on	the	New	York	Stock	Exchange	and	the	SIX	Swiss	Exchange.	Shares	of	Baker	Hughes	common	stock	were suspended	from	trading	on	the	New	York	Stock	Exchange	and	the	SIX	Swiss	Exchange	prior	to	the	open	of	trading	on	July	5,	2017.	The	New	York	Stock Exchange	filed	a	Form	25	on	Baker	Hughes'	behalf	to	provide	notice	to	the	SEC	regarding	the	withdrawal	of	shares	of	Baker	Hughes	common	stock	from listing	and	to	terminate	the	registration	of	such	shares	under	Section	12(b)	of	the	Exchange	Act.

As	a	result	of	the	Transactions,	on	July	3,	2017,	the	Company	issued	 428	million	shares	of	Class	A	common	stock	to	the	former	stockholders	of Baker	Hughes	and	717	million	shares	of	Class	B	common	stock	to	GE.	The	issuance	of	the	Company's	Class	A	common	stock	in	connection	with	the Transactions	was	registered	under	the	Securities	Act	of	1933,	as	amended	(the	Securities	Act),	pursuant	to	BHGE's	registration	statement	on	Form	S-4 (File	No.	333-216991),	as	amended,	filed	with	the	SEC	by	BHGE	and	declared	effective	on	May	30,	2017.	Pursuant	to	Rule	12g-3(a)	under	the	Exchange Act,	BHGE	is	the	successor	issuer	to	Baker	Hughes	with	respect	to	the	common	stock	of	Baker	Hughes.	Therefore,	the	Class	A	common	stock	is deemed	to	be	registered	under	Section	12(b)	of	the	Exchange	Act,	and	BHGE	is	subject	to	the	requirements	of	the	Exchange	Act.

Based	on	the	relative	voting	rights	of	former	Baker	Hughes	stockholders	and	GE	immediately	following	completion	of	the	Transactions,	and	after taking	into	consideration	all	relevant	facts,	GE	O&G	is	considered	to	be	the	"acquirer"	for	accounting	purposes.	As	a	result,	the	Transactions	are	reported as	a	business	combination	using	the	acquisition	method	of	accounting	with	GE	O&G	treated	as	the	"acquirer"	and	Baker	Hughes	treated	as	the "acquired"	company.

The	tables	below	present	the	fair	value	of	the	consideration	exchanged	and	the	preliminary	estimates	of	the	fair	value	of	assets	acquired	and liabilities	assumed	and	the	associated	fair	value	of	the	noncontrolling	interest	related	to	the	acquired	net	assets	of	Baker	Hughes.	The	final	determination of	fair	value	for	certain	assets	and	liabilities	will	be	completed	as	soon	as	the	information	necessary	to	complete	the	analysis	is	obtained.	These amounts,	which	may	differ	materially	from	these	preliminary	estimates,	will	continue	to	be	refined	and	will	be	finalized	as	soon	as	possible,	but	no	later than	one	year	from	the	acquisition	date.	The	primary	areas	of	the	preliminary	estimates	that	are	not	yet	finalized	relate	to	inventory,	property,	plant	and equipment,	identifiable	intangible	assets,	equity-method	investments,	deferred	income	taxes,	uncertain	tax	positions	and	contingencies.

| Purchase	consideration |  |
| :--- | :--- |
| (In\tmillions,\texcept\tshare\tand\tper\tshare\tamounts) | July\t3,\t2017 |
| Baker\tHughes\tshares\toutstanding | 426,097,407 |
| Restricted\tstock\tunits\tvested\tupon\tclosing | 1,611,566 |
| Total\tBaker\tHughes\tshares\toutstanding\tfor\tpurchase\tconsideration | 427,708,973 |
| Baker\tHughes\tshare\tprice\ton\tJuly\t3,\t2017\tper\tshare | $57.68 |
| Purchase\tconsideration | $24,670 |
| Rollover\tof\toutstanding\toptions\tinto\toptions\tto\tpurchase\tClass\tA\tshares\t(fair\tvalue) | $114 |
| Precombination\tservice\tof\trestricted\tstock\tunits\t(fair\tvalue) | $14 |
| Total\tpurchase\tconsideration | $24,798 |

| Preliminary	identifiable	assets	acquired	and	liabilities	assumed | Estimated	fair	value	at	July	3,<br>2017 |
| :--- | :--- |
| Assets |  |
| Cash\tand\tequivalents | $4,133 |
| Current\treceivables | 2,383 |
| Inventories\t(1) | 1,695 |
| Property,\tplant\tand\tequipment | 4,868 |
| Intangible\tassets\t(2) | 4,123 |
| All\tother\tassets | 1,544 |
| Liabilities |  |
| Accounts\tpayable | $(1,106) |
| Borrowings | (3,370) |
| Deferred\tincome\ttaxes\t (3) | (317) |
| Liabilities\tfor\tpension\tand\tother\tpostretirement\tbenefits | (655) |
| All\tother\tliabilities | (1,476) |
| Total\tidentifiable\tnet\tassets | $11,822 |
| Noncontrolling\tinterest\tassociated\twith\tnet\tassets\tacquired | (76) |
| Goodwill\t(4) | 13,052 |
| Total\tpurchase\tconsideration | $24,798 |

(1) Includes	$87	million	of	adjustments	to	write-up	the	acquired	inventory	to	its	estimated	fair	value.	Cost	of	goods	sold	in	2017	reflects	this	increased	valuation as	this	inventory	was	used	or	sold	in	the	period	from	July	3,	2017	to	December	31,	2017.

(2) Intangible	assets,	as	provided	in	the	table	below,	are	recorded	at	estimated	fair	value,	as	determined	by	management	based	on	available	information	which includes	a	preliminary	valuation.	The	estimated	useful	lives	for	intangible	assets	were	determined	based	upon	the	remaining	useful	economic	lives	of	the intangible	assets	that	are	expected	to	contribute	directly	or	indirectly	to	future	cash	flows.	We	consider	the	Baker	Hughes	trade	name	to	be	an	indefinite	life intangible	asset,	which	will	not	be	amortized	and	will	be	subject	to	an	annual	impairment	test.

|  | Estimated	Fair	Value | Estimated	Weighted<br>Average	Life	(Years) |
| :--- | :--- | :--- |
| Trademarks\t-\tBaker\tHughes | $2,100 | Indefinite\tlife |
| Customer-related | 1,260 | 15 |
| Patents\tand\ttechnology | 550 | 10 |
| Trademarks\t-\tOther | 70 | 10 |
| Capitalized\tsoftware | 90 | 3-7 |
| In-process\tresearch\tand\tdevelopment | 45 | Indefinite\tlife |
| Favorable\tlease\tcontracts | 8 | 10 |
| Total | $4,123 |  |

(3) Includes	approximately	$560	million	of	net	deferred	tax	liabilities	related	to	the	estimated	fair	value	of	intangible	assets	included	in	the	preliminary	purchase consideration	and	approximately	$243	million	of	other	net	deferred	tax	assets,	including	non-U.S.	loss	carryforwards	net	of	valuation	allowances	and offsetting	liabilities	for	unrecognized	benefits.

(4) Goodwill	represents	the	excess	of	the	total	purchase	consideration	over	fair	value	of	the	net	assets	recognized	and	represents	the	future	economic	benefits that	we	believe	will	result	from	combining	the	operations	of	GE	O&G	and	Baker	Hughes,	including	expected	future	synergies	and	operating efficiencies.	Goodwill	resulting	from	the	Transactions	has	been	preliminarily	allocated	to	the	Oilfield	Services	segment,	of	which	$67	million	is deductible	for	tax	purposes.

During	the	fourth	quarter	of	2017,	the	Company	made	measurement	period	adjustments	to	reflect	facts	and	circumstances	in	existence	as	of	the acquisition	date.	These	adjustments	resulted	in	a	decrease	in	goodwill	of	approximately	$401	million	mostly	due	to	the	step-up	to	fair	value	of	property, plant	and	equipment	of	$682	million	partially	offset	by	a	reduction	in	intangible	assets	of	 $367	million.	As	a	result	of	the	increase	in	property,	plant	and equipment	and	the	reduction	of	intangible	assets	during	the	fourth	quarter	of	2017,	we	recorded	a	net	increase	to

depreciation	and	amortization	expense	of	 $63	million,	which	adjusts	the	depreciation	and	amortization	expense	to	the	amount	that	would	have	been recorded	in	previous	interim	reporting	periods	if	the	adjustment	to	the	provisional	amounts	had	been	recognized	as	of	the	acquisition	date.	In	addition,	we reclassified	certain	balances	to	conform	to	our	current	presentation.	Additionally,	approximately	$343	million	of	foreign	tax	credit	carryforwards	offset	with a	valuation	allowance	were	recorded	related	to	foreign	earnings	that	were	not	considered	to	be	permanently	reinvested.	The	acquisition	of	Baker	Hughes contributed	revenue	of	approximately	$5,184	million	and	pretax	segment	operating	income	of	approximately	 $256	million	for	the	period	from	July	3,	2017 through	December	31,	2017.

BHGE	LLC	is	treated	as	a	partnership	for	U.S.	federal	income	tax	purposes.	As	such,	BHGE	LLC	will	not	itself	be	subject	to	U.S.	federal	income	tax under	current	U.S.	tax	laws.	The	members	of	BHGE	LLC	will	each	be	required	to	take	into	account	for	U.S.	federal	income	tax	purposes	their	distributive share	of	the	items	of	income,	gain,	loss	and	deduction	of	BHGE	LLC,	which	generally	will	include	the	U.S.	operations	of	both	Baker	Hughes	and	GE O&G.	BHGE	and	GE	will	each	be	taxed	on	their	distributive	share	of	income	and	gain,	whether	or	not	a	corresponding	amount	of	cash	or	other	property	is distributed	to	them.	For	assets	held	indirectly	by	BHGE	LLC	through	subsidiaries,	the	taxes	attributable	to	those	subsidiaries	will	be	reflected	in	our consolidated	and	combined	financial	statements.

During	2017,	2016	and	2015,	acquisition	costs	of	$373	million,	$33	million	and	$27	million,	respectively,	were	expensed	as	incurred	and	were reported	as	merger	and	related	costs.	Costs	in	2017	include	severance	and	other	separation	payments	made	to	certain	executive	officers	of	Baker Hughes	related	to	change-in-control	with	double	trigger	provisions	in	their	existing	employment	agreements,	professional	fees	of	advisors,	and	integration and	synergy	costs	related	to	the	combination	of	Baker	Hughes	and	GE	O&G.	The	double-trigger	provisions	resulted	in	payments	to	executives	of	Baker Hughes	following	two	events:	a	change-in-control	and	termination	or	reduction	in	the	responsibilities	of	the	executives.	BHGE	terminated	the	employment of	certain	executives	following	the	business	combination.

# UNAUDITED	ACTUAL	AND	PRO	FORMA	INFORMATION

The	following	unaudited	pro	forma	information	has	been	presented	as	if	the	Transactions	occurred	on	January	1,	2016.	This	information	has	been prepared	by	combining	the	historical	results	of	GE	O&G	and	historical	results	of	Baker	Hughes.	The	unaudited	pro	forma	combined	financial	data	for	all periods	presented	were	adjusted	to	give	effect	to	pro	forma	events	that	1)	are	directly	attributable	to	the	aforementioned	Transactions,	2)	factually supportable,	and	3)	expected	to	have	a	continuing	impact	on	the	consolidated	results	of	operations.	The	adjustments	are	based	on	information	available to	the	Company	at	this	time.	Accordingly,	the	adjustments	are	subject	to	change	and	the	impact	of	such	changes	may	be	material.	The	unaudited	pro forma	results	do	not	include	any	incremental	cost	savings	that	may	result	from	the	integration.

The	unaudited	combined	pro	forma	information	is	for	informational	purposes	only	and	is	not	necessarily	indicative	of	what	the	combined	company's results	actually	would	have	been	had	the	acquisition	been	completed	as	of	the	beginning	of	the	periods	as	indicated.	In	addition,	the	unaudited	pro	forma information	does	not	purport	to	project	the	future	results	of	the	combined	company.

Significant	adjustments	to	the	pro	forma	information	below	include	recognition	of	non-recurring	direct	incremental	acquisition	costs	in	2016	and exclusion	of	those	costs	from	all	other	years	presented;	amortization	associated	with	an	estimate	of	the	acquired	intangible	assets;	depreciation associated	with	an	estimate	of	the	fair	value	step-up	of	property,	plant	and	equipment;	and	reduction	of	interest	expense	for	fair	value	adjustments	to debt.	A	non-recurring	contractually	obligated	termination	fee	of	$3,500	million	($3,301	million	net	of	related	costs	incurred)	received	by	Baker	Hughes	due to	an	inability	to	obtain	antitrust	related	approvals	from	a	prior	merger	agreement	is	recognized	in	2016.

|  | 2017 | 2016 |
| :--- | :--- | :--- |
| Revenue | $21,921 | $23,102 |
| Net\tloss | (335) | (2,734) |
| Net\tloss\tattributable\tto\tthe\tCompany | (92) | (998) |
| Loss\tper\tClass\tA\tshare\t-\tbasic\tand\tdiluted\t (1) | (0.22) | (2.33) |

(1) The	calculation	of	diluted	loss	per	Class	A	share	excludes	shares	potentially	issuable	under	stock-based	incentive	compensation	plans	and	the	exchange	of Class	B	shares	with	Class	A	shares	under	the	Exchange	Agreement,	as	their	effect,	if	included,	would	be	antidilutive.

# NOTE	3.	CURRENT	RECEIVABLES

Current	receivables	are	comprised	of	the	following	at	December	31:

|  | 2017 | 2016 |
| :--- | :--- | :--- |
| Customer\treceivables | $4,699 | $1,699 |
| Related\tparties | 801 | 392 |
| Other | 844 | 658 |
| Total\tcurrent\treceivables | 6,344 | 2,749 |
| Less:\tAllowance\tfor\tdoubtful\taccounts | (330) | (186) |
| Total\tcurrent\treceivables,\tnet | $6,014 | $2,563 |

Customer	receivables	are	recorded	at	the	invoiced	amount.	The	"Other"	category	primarily	consists	of	advance	payments	to	suppliers,	indirect	taxes and	other	tax	receivables.

# NOTE	4.	INVENTORIES

Inventories,	net	of	reserves	of	$360	million	and	$260	million	in	2017	and	2016,	respectively,	are	comprised	of	the	following	at	December	31:

|  | 2017 | 2016 |
| :--- | :--- | :--- |
| Finished\tgoods | $2,597 | $1,585 |
| Work\tin\tprocess\tand\traw\tmaterials | 1,993 | 1,639 |
| Total\tinventories,\tnet | $4,590 | $3,224 |

During	2017	and	2016,	we	recorded	$157	million	and	$138	million	of	inventory	impairments	as	a	result	of	certain	restructuring	activities	initiated	by the	Company.	Charges	for	inventory	impairments	are	reported	in	the	"Cost	of	goods	sold"	caption	of	the	consolidated	and	combined	statements	of income	(loss).

# NOTE	5.	PROPERTY,	PLANT	AND	EQUIPMENT

Property,	plant	and	equipment	are	comprised	of	the	following	at	December	31:

|  | Useful	Life | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Land\tand\timprovements\t (1) | 8\t-\t20\tyears\t(1) | $413 | $130 |
| Buildings,\tstructures\tand\trelated\tequipment | 5\t-\t40\tyears | 3,168 | 1,344 |
| Machinery,\tequipment\tand\tother | 2\t-\t20\tyears | 6,195 | 2,916 |
| Total\tcost |  | 9,776 | 4,390 |
| Less:\tAccumulated\tdepreciation |  | 2,817 | 2,065 |
| Property,\tplant\tand\tequipment,\tless\taccumulated\ndepreciation |  | $6,959 | $2,325 |

# (1) Useful	life	excludes

land.

Depreciation	expense	relating	to	property,	plant	and	equipment	was	 $716	million,	$311	million	and	$351	million	in	2017,	2016	and	2015, respectively.	See	"Note	18.	Restructuring,	impairment	and	other"	for	additional	information	on	property,	plant	and	equipment	impairments.

# NOTE	6.	GOODWILL	AND	INTANGIBLE	ASSETS

# GOODWILL

The	changes	in	the	carrying	value	of	goodwill	are	detailed	below	by	segment:

|  | Oilfield<br>Services | Oilfield<br>Equipment | Turbo-machinery<br>&amp;	Process<br>Solutions | Digital<br>Solutions | Total |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tDecember\t31,\t2015,\tgross | $2,885 | $3,840 | $1,853 | $2,043 | $10,621 |
| Accumulated\timpairment\tat\tDecember\t31,\t2015 | (2,633) | (867) | — | (254) | (3,754) |
| Balance\tat\tDecember\t31,\t2015 | 252 | 2,973 | 1,853 | 1,789 | 6,867 |
| Acquisitions\tand\tpurchase\taccounting\tadjustments |  | 19 | (1) |  | 18 |
| Currency\texchange\tand\tothers | (106) | (7) | (38) | (54) | (205) |
| Balance\tat\tDecember\t31,\t2016 | 146 | 2,985 | 1,814 | 1,735 | 6,680 |
| Acquisition\t(1) | 13,052 | — | — | — | 13,052 |
| Currency\texchange\tand\tothers | 7 | 49 | 92 | 47 | 195 |
| Balance\tat\tDecember\t31,\t2017 | $13,205 | $3,034 | $1,906 | $1,782 | $19,927 |

(1) Includes	goodwill	associated	with	the	acquisition	of	Baker	Hughes.	This	amount	and	its	allocations	to	segments	are preliminary.

Subsequent	to	the	close	of	the	acquisition	of	Baker	Hughes,	we	realigned	our	reporting	units	to	Oilfield	Services	(OFS),	Oilfield	Equipment	(OFE), Turbomachinery	&	Process	Solutions	(TPS)	and	Digital	Solutions	(DS)	(refer	to	"Note	15.	Segment	Information")	and	reallocated	the	goodwill	that	existed as	of	June	30,	2017	to	the	new	reportable	segments	for	all	historical	periods	presented.	The	majority	of	Baker	Hughes	business	was	combined	with	the GE	O&G	Surface	business	to	create	the	new	Oilfield	Services	reporting	segment.	Our	reporting	units	are	the	same	as	our	four	reportable	segments.

We	test	goodwill	for	impairment	annually	in	the	third	quarter	of	each	year	using	data	as	of	July	1	of	that	year,	which	would	include	consideration	of any	segment	realignment.	The	impairment	test	consists	of	two	steps:	in	step	one,	the	carrying	value	of	the	reporting	unit	is	compared	with	its	fair	value;	in step	two,	which	is	applied	only	when	the	carrying	value	is	more	than	its	fair	value,	the	amount	of	goodwill	impairment,	if	any,	is	derived	by	deducting	the fair	value	of	the	reporting	unit's	assets	and	liabilities	from	the	fair	value	of	its	equity,	and	comparing	that	amount	with	the	carrying	amount	of	goodwill.		We determined	fair	values	for	each	of	the	reporting	units	using	a	combination	of	the	market	approach	and	the	income	approach.	We	assessed	the	valuation methodologies	based	upon	the	relevance	and	available	data	and	have	weighted	the	results	appropriately.

Valuations	using	the	market	approach	were	derived	from	metrics	of	publicly	traded	companies	or	historically	completed	transactions	of	comparable businesses.	The	selection	of	comparable	businesses	was	based	on	the	markets	in	which	the	reporting	units	operate	giving	consideration	to	risk	profiles, size,	geography,	and	diversity	of	products	and	services.	A	market	approach	is	limited	to	reporting	units	for	which	there	are	publicly	traded	companies	that have	the	characteristics	similar	to	our	businesses.

Under	the	income	approach,	fair	value	was	determined	based	on	the	present	value	of	estimated	future	cash	flows,	discounted	at	an	appropriate	risk- adjusted	rate.	We	used	our	internal	forecasts	to	estimate	future	cash	flows	and	included	an	estimate	of	long-term	future	growth	rates	based	on	our	most recent	views	of	the	long-term	outlook	for	each	business.	Actual	results	may	differ	from	those	assumed	in	our	forecasts.	We	derived	our	discount	rates using	a	capital	asset	pricing	model	and	analyzing	published	rates	for	industries	relevant	to	our	reporting	units	to	estimate	the	cost	of	equity	financing.	We used	discount	rates	that	are	commensurate	with	the	risks	and	uncertainty	inherent	in	the	respective	businesses	and	in	our	internally	developed	forecasts. Discount	rates	used	in	our	reporting	unit	valuations	ranged	from	10%	to	11%.	Estimating	the	fair	value	of	reporting	units	requires	the	use	of	estimates and	significant	judgments	that	are	based	on	a	number	of	factors	including	actual	operating	results.	It	is	reasonably	possible	that	the	judgments	and estimates	described	above	could	change	in	future	periods.

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.	The	impairment	charge	has	been	included	as	part	of "Impairment	of	goodwill"	in	the	consolidated	and	combined	statement	of	income	(loss).

We	performed	our	annual	impairment	test	of	goodwill	as	of	July	1,	2017	and	July	1,	2016	for	all	of	our	reporting	units.	Based	on	the	results	of	our	step one	testing,	the	fair	values	of	each	of	the	reporting	units	exceeded	their	carrying	values;	therefore,	the	second	step	of	the	impairment	test	was	not required	to	be	performed	for	any	of	our	reporting	units	and	no	goodwill	impairment	was	recognized.

In	addition	to	our	annual	impairment	testing,	we	also	test	goodwill	for	impairment	between	annual	impairment	testing	dates	whenever	events	or circumstances	occur	that,	in	our	judgment,	could	more	likely	than	not	reduce	the	fair	value	of	one	or	more	reporting	units	below	its	carrying	amount.	In assessing	the	possibility	that	a	reporting	unit's	fair	value	has	been	reduced	below	its	carrying	amount	due	to	the	occurrence	of	events	or	circumstances between	annual	impairment	testing	dates,	we	consider	all	available	evidence,	including	(but	not	limited	to)	(i)	the	results	of	our	impairment	testing	at	the prior	annual	impairment	testing	date	(in	particular,	the	magnitude	of	the	excess	of	fair	value	over	carrying	value	observed),	(ii)	downward	revisions	to internal	forecasts	(and	the	magnitude	thereof),	if	any,	and	(iii)	declines	in	our	market	capitalization	below	our	book	value	(and	the	magnitude	and	duration of	those	declines),	if	any.	Between	July	1,	2017	and	December	31,	2017,	we	have	not	identified	any	events	or	circumstances	that	could	more	likely	than not	reduce	the	fair	value	of	one	or	more	of	our	reporting	units	below	its	carrying	amount.	However,	there	can	be	no	assurances	that	further	sustained declines	in	macroeconomic	or	business	conditions	affecting	our	industry	and	businesses	(i)	will	not	occur	and,	(ii)	were	they	to	occur,	that	those	further sustained	declines	will	not	result	in	additional	impairments	in	future	periods.

As	of	December	31,	2017,	we	believe	that	the	goodwill	is	recoverable	for	all	the	reporting	units,	however,	there	can	be	no	assurances	that	the goodwill	will	not	be	impaired	in	future	periods.

Intangible	assets	are	comprised	of	the	following	at	December	31:

|  |  | 2017 |  |  | 2016 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Gross\nCarrying\nAmount | Accumulated\nAmortization | Net | Gross\nCarrying\nAmount | Accumulated\nAmortization | Net |
| Technology | $1,177 | $(440) | $737 | $596 | $(371) | $225 |
| Customer\trelationships | 3,202 | (819) | 2,383 | 1,920 | (660) | 1,260 |
| Capitalized\tsoftware | 1,130 | (697) | 433 | 896 | (535) | 361 |
| Trade\tnames\tand\ttrademarks | 757 | (159) | 598 | 681 | (130) | 551 |
| Other | 10 | — | 10 | 1 | (1) | — |
| Finite-lived\tintangible\tassets | 6,276 | (2,115) | 4,161 | 4,094 | (1,697) | 2,397 |
| Indefinite-lived\tintangible\tassets\t^(1) | 2,197 | — | 2,197 | 52 | — | 52 |
| Total\tintangible\tassets | $8,473 | $(2,115) | $6,358 | $4,146 | $(1,697) | $2,449 |

(1) Indefinite-lived	intangible	assets	principally	comprise	trade	names	and	trademarks	acquired	in	business combinations.

Finite-lived	intangible	assets	increased	by	 $1,764	million	for	the	year	ended	December	31,	2017,	primarily	as	a	result	of	the	acquired	Baker	Hughes intangible	assets	offset	by	amortization	during	the	periods	(refer	to	"Note	2.	Business	Acquisition").

Indefinite-lived	intangible	assets	increased	during	the	year	ended	 December	31,	2017	as	a	result	of	the	acquisition	of	the	Baker	Hughes	trade	name which	was	preliminarily	valued	at	$2,100	million	using	the	relief-from-royalty	method.	Indefinite-lived	intangible	assets	as	of	December	31,	2016	comprise trademarks	acquired	in	previous	years	(Vetco	and	Bently	Nevada	trademarks	for	$42	million	and	$10	million,	respectively).

Intangible	assets	are	generally	amortized	on	a	straight-line	basis	with	estimated	useful	lives	ranging	from	 one	to	30	years.	Amortization	expense	for the	years	ended	December	31,	2017,	2016	and	2015	was	$387	million,	$239	million	and	$179	million,	respectively.	We	incurred	additional	amortization expense	of	$75	million	during	the	year	ended	December	31,	2017	due	to	the	acquisition	of	Baker	Hughes.

Estimated	amortization	expense	for	each	of	the	subsequent	five	fiscal	years	is	expected	to	be	as	follows:

| Year | Estimated<br>Amortization	Expense |
| :--- | :--- |
| 2018 | $432 |
| 2019 | 398 |
| 2020 | 372 |
| 2021 | 326 |
| 2022 | 293 |

# NOTE	7.	CONTRACT	ASSETS

A	majority	of	our	long-term	product	service	agreements	relate	to	our	Turbomachinery	&	Process	Solutions	segment.	Contract	assets	are	comprised	of the	following	at	December	31:

|  | 2017 | 2016 |
| :--- | :--- | :--- |
| Long-term\tproduct\tservice\tagreements\t(1) | $1,410 | $1,046 |
| Long-term\tequipment\tcontract\trevenue\t (2) | 997 | 703 |
| Total\trevenue\tin\texcess\tof\tbillings | 2,407 | 1,749 |
| Deferred\tinventory\tcosts\t (3) | 338 | 218 |
| Contract\tassets | $2,745 | $1,967 |

(1) Reflects	revenue	earned	in	excess	of	billings	on	our	long-term	product	service agreements.

(2) Reflects	revenue	earned	in	excess	of	billings	on	our	long-term	contracts	to	construct	technically	complex equipment.

(3) Represents	cost	deferral	for	shipped	goods	and	other	costs	for	which	the	criteria	for	revenue	recognition	has	not	yet	been met.

# NOTE	8.	BORROWINGS

Short-term	and	long-term	borrowings	are	comprised	of	the	following	at	December	31:

| Short-term	bank	borrowings | $171 | 12.6% | $79 | 9.1% |
| :--- | :--- | :--- | :--- | :--- |
| Current\tportion\tof\tlong-term\tborrowings | 639 | 2.1% | 34 | 1.3% |
| Short-term\tborrowings\tfrom\tGE | 1,124 |  | 121 |  |
| Other\tshort-term\tborrowings | 103 | 7.6% | 5 | 1.3% |
| Total\tshort-term\tborrowings | 2,037 |  | 239 |  |
| Long-term\tborrowings |  |  |  |  |
| (2)\n3.2%\tSenior\tNotes\tdue\tAugust\t2021 | 526 | 2.5% | — | — |
| 2.773%\tSenior\tNotes\tdue\tDecember\t2022 | 1,244 | 2.9% | — | — |
| 8.55%\tDebentures\tdue\tJune\t2024\t^(2) | 135 | 3.9% | — | — |
| 3.337%\tSenior\tNotes\tdue\tDecember\t2027 | 1,342 | 3.4% | — | — |
| 6.875%\tNotes\tdue\tJanuary\t2029\t (2) | 308 | 3.9% | — | — |
| 5.125%\tNotes\tdue\tSeptember\t2040\t^(2) | 1,311 | 4.1% | — | — |
| 4.080%\tSenior\tNotes\tdue\tDecember\t2047 | 1,337 | 4.1% | — | — |
| Capital\tleases | 87 | 7.0% | 1 | 4.5% |
| Other\tlong-term\tborrowings | 22 | 1.9% | 37 | 1.2% |
| Total\tlong-term\tborrowings | 6,312 |  | 38 |  |
| Total\tborrowings | $8,349 |  | $277 |  |

(1) Weighted	average	effective	interest	rate	is	based	on	carrying	value	including	step-up	adjustment	recorded	upon	the	acquisition	of	Baker Hughes.

(2) Represents	long-term	fixed	rate	debt	obligations	assumed	in	connection	with	the	acquisition	of	Baker	Hughes,	net	of	amounts	repurchased	subsequent	to	the closing	of	the	Transactions.

On	July	3,	2017,	in	connection	with	the	Transactions,	BHGE	LLC	entered	into	a	new	 five-year	$3	billion	committed	unsecured	revolving	credit	facility (the	2017	Credit	Agreement)	with	commercial	banks	maturing	in	July	2022.	The	2017	Credit	Agreement	contains	certain	customary	representations	and warranties,	certain	affirmative	covenants	and	no	negative	covenants.	Upon	the	occurrence	of	certain	events	of	default,	our	obligations	under	the	2017 Credit	Agreement	may	be	accelerated.	Such	events	of	default	include	payment	defaults	to	lenders	under	the	2017	Credit	Agreement,	and	other customary	defaults.	No	such	events	of	default	have	occurred.	During	the	year	ended	December	31,	2017,	there	were	no	borrowings	under	the	2017 Credit	Agreement.

On	December	11,	2017,	BHGE	LLC	completed	a	private	placement	offering	 $3,950	million	aggregate	principal	amount	of	Senior	Notes,	consisting	of $1,250	million	aggregate	principal	amount	of	2.773%	Senior	Notes	due	2022,	$1,350	million	aggregate	principal	amount	of	3.337%	Senior	Notes	due 2027	and	$1,350	million	aggregate	principal	amount	of	4.080%	Senior	Notes	due	2047.	These	Senior	Notes	are	presented	net	of	issuance	costs	of	$26 million	in	our	consolidated	and	combined	statement	of	financial	position.	BHGE	LLC	will	pay	interest	on	each	series	of	Exchange	Notes	on	June	15	and December	15	of	each	year,	beginning	on	June	15,	2018.	The	Notes	are	senior	unsecured	obligations	and	rank	equal	in	right	of	payment	to	all	of	BHGE LLC's	existing	and	future	senior	indebtedness;	senior	in	right	of	payment	to	any	future	subordinated	indebtedness;	and	effectively	junior	to	BHGE	LLC's future	secured	indebtedness,	if	any,	and	to	all	existing	and	future	indebtedness	of	its	subsidiaries.	BHGE	LLC	may	redeem,	at	its	option,	all	or	part	of	the Notes	at	any	time,	at	the	applicable	make-whole	redemption	prices	plus	accrued	and	unpaid	interest	to	the	date	of	redemption.	The	Senior	Notes	contain covenants	that	restrict	BHGE	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.

BHGE	LLC	used	a	portion	of	the	net	proceeds	from	the	private	placement	of	the	Senior	Notes	to	fund	the	purchase	of	 $82	million	of	7.5%	senior notes	due	2018,	$25	million	of	6.0%	senior	notes	due	2018,	$6	million	of	8.55%	debentures	due	2024	and	 $62	million	of	6.875%	notes	due	2029	that were	validly	tendered	in	connection	with	the	cash	tender	offers	commenced	by	BHGE	LLC	on	December	4,	2017.	Under	the	cash	tender	offer	BHGE	LLC purchased	a	further	$3	million	of	6.875%	notes	due	2029	in	January	2018.	BHGE	LLC	also	redeemed	in	January	2018	all	remaining	aggregate	principal amount	of	the	2018	Senior	Notes	of	$615	million	that	were	not	tendered	for	purchase	in	accordance	with	the	relevant	indentures.	The	above	transactions resulted	in	total	repurchase	of	our	Senior	Notes	of	$793	million.

BHGE	LLC	intends	to	use	the	remaining	net	proceeds	from	the	offering	of	the	Senior	Notes	for	general	corporate	purposes,	which	may	include purchases	of	BHGE	LLC's	common	units	from	us	and	GE	in	connection	with	the	share	repurchase	authorization	announced	by	us	on	November	6,	2017.

On	January	2,	2018,	BHGE	LLC	commenced	an	offering	to	exchange	 $3,950	million	of	all	the	outstanding,	unregistered	senior	notes	that	were	issued in	a	private	offering	on	December	11,	2017,	for	identical,	registered	2.773%	Senior	Notes	due	2022,	3.337%	Senior	Notes	due	2027	and	 4.080%	Senior Notes	due	2047.	The	exchange	offer	was	completed	on	January	31,	2018.

Concurrent	with	the	Transactions	associated	with	the	acquisition	of	Baker	Hughes	on	July	3,	2017,	Baker	Hughes	Co-Obligor,	Inc.	became	a	co- obligor,	jointly	and	severally	with	BHGE	LLC,	on	our	registered	debt	securities.		This	co-obligor	is	a	100%-owned	finance	subsidiary	of	BHGE	LLC	that was	incorporated	for	the	sole	purpose	of	serving	as	a	co-obligor	of	debt	securities	and	has	no	assets	or	operations	other	than	those	related	to	its	sole purpose.	Baker	Hughes	Co-Obligor,	Inc.	is	also	a	co-obligor	of	the	$3,950	million	senior	notes	issued	on	December	11,	2017	by	BHGE	LLC	in	a	private placement.

In	connection	with	our	acquisition	of	Baker	Hughes	we	assumed	all	the	outstanding	borrowings	including	all	notes,	senior	notes,	and	debentures	of Baker	Hughes.		A	step-up	adjustment	of	$364	million	was	recorded	upon	the	acquisition	of	Baker	Hughes	to	present	these	borrowings	at	fair	value.

The	estimated	fair	value	of	total	borrowings	at	 December	31,	2017	and	December	31,	2016	was	$8,466	million	and	$303	million,	respectively.	For	a majority	of	our	borrowings	the	fair	value	was	determined	using	quoted	period-end	market	prices.	Where	market	prices	are	not	available,	we	estimate	fair values	based	on	valuation	methodologies	using	current	market	interest	rate	data	adjusted	for	our	non-performance	risk.

Maturities	of	debt	for	each	of	the	five	years	in	the	period	ended	December	31,	2022,	and	in	the	aggregate	thereafter,	are	listed	in	the	table	below:

|  | 2018 | 2019 | 2020 | 2021 | 2022 | Thereafter |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Total\tdebt | $2,037 | $43 | $13 | $540 | $1,255 | $4,461 |

See	"Note	16.	Related	Party	Transactions"	for	additional	information	on	the	short-term	borrowings	from	GE,	and	see	"Note	14.	Financial Instruments"	for	additional	information	about	borrowings	and	associated	swaps.

# NOTE	9.	EMPLOYEE	BENEFIT	PLANS

# GE	MULTI-EMPLOYER	PLANS

Certain	of	our	U.S.	employees	are	covered	under	various	U.S.	GE	employee	benefit	plans,	including	GE's	retirement	plans	(pension,	retiree	health and	life	insurance,	and	savings	benefit	plans).	In	addition,	certain	United	Kingdom	(UK)	employees	participate	in	the	GE	UK	Pension	Plan.	We	are allocated	relevant	participation	costs	for	these	GE	employee	benefit	plans	as	part	of	multi-employer	plans.	As	such,	we	have	not	recorded	any	liabilities associated	with	our	participation	in	these	plans.	Expenses	associated	with	our	participation	in	these	plans	was	$132	million,	$140	million	and	$148	million in	the	years	ended	December	31,	2017,	2016	and	2015,	respectively.

During	2016,	two	UK	pension	plans	sponsored	by	us,	the	1987	Vetco	Gray	Hughes	Pension	Plan	and	the	UK	Dresser	Pension	Scheme,	were merged	into	the	GE	UK	Pension	Plan.	We	agreed	to	pay	deficit	contributions	for	the	next	10	years.	The	estimated	present	value	of	these	payments	is approximately	$15	million	and	is	recorded	in	the	consolidated	and	combined	Statement	of	Financial	Position	in	"All	other	liabilities."		Subsequent	to	that merger,	plan	participants	in	these	respective	plans	participate	in	the	GE	UK	Pension	Plan.

# DEFINED	BENEFIT	PLANS

In	addition	to	these	GE	plans,	certain	of	our	employees	are	also	covered	by	company	sponsored	pension	plans.	Our	pension	plans	in	2017	included seven	U.S.	plans	and	six	non-U.S.	pension	plans,	primarily	in	the	UK,	Germany,	and	Canada,	all	with	pension	assets	or	obligations	greater	than $20 million.	We	use	a	December	31	measurement	date	for	these	plans.	These	defined	benefit	plans	generally	provide	benefits	to	employees	based	on formulas	recognizing	length	of	service	and	earnings.	We	also	provide	certain	postretirement	health	care	benefits	("Other	Postretirement	Benefits"), through	an	unfunded	plan,	to	a	closed	group	of	U.S.	employees	who	retire	and	have	met	certain	age	and	service	requirements.

# Funded	Status

The	funded	status	position	represents	the	difference	between	the	benefit	obligation	and	the	plan	assets.	The	projected	benefit	obligation	(PBO)	for pension	benefits	represents	the	actuarial	present	value	of	benefits	attributed	to	employee	services	and	compensation	and	includes	an	assumption	about future	compensation	levels.	The	accumulated	benefit	obligation	(ABO)	is	the	actuarial	present	value	of	pension	benefits	attributed	to	employee	service	to date	and	present	compensation	levels.	The	ABO	differs	from	the	PBO	in	that	the	ABO	does	not	include	any	assumptions	about	future	compensation levels.

Below	is	the	reconciliation	of	the	beginning	and	ending	balances	of	benefit	obligations,	fair	value	of	plan	assets	and	the	funded	status	of	our	plans.

|  | Pension	Benefits<br>2017 | 2016 | Other	Postretirement<br>Benefits<br>2017 | 2016 |
| :--- | :--- | :--- | :--- | :--- |
| Change\tin\tbenefit\tobligation: |  |  |  |  |
| Benefit\tobligation\tat\tbeginning\tof\tyear | $820 | $1,290 | $117 | $136 |
| Service\tcost | 37 | 18 | 2 | 2 |
| Interest\tcost | 51 | 34 | 6 | 5 |
| Plan\tamendment | — | — | (23) | (5) |
| Actuarial\tloss\t(gain) | 41 | 39 | — | (14) |
| Benefits\tpaid | (65) | (39) | (13) | (6) |
| Curtailments | (45) | — | 5 | (1) |
| Settlements | (10) | — | — | — |
| Business\tacquisition\t(1) | 1,546 | — | 93 | — |
| Other\t(2) | (2) | (460) | — | — |
| Foreign\tcurrency\ttranslation\tadjustments | 45 | (62) | — | — |
| Benefit\tobligation\tat\tend\tof\tyear | 2,418 | 820 | 187 | 117 |
| Change\tin\tplan\tassets: |  |  |  |  |
| Fair\tvalue\tof\tplan\tassets\tat\tbeginning\tof\tyear | 567 | 915 | — | — |
| Actual\treturn\ton\tplan\tassets | 152 | 43 | — | — |
| Employer\tcontributions | 50 | 50 | 13 | 6 |
| Benefits\tpaid | (65) | (39) | (13) | (6) |
| Settlements | (10) | — | — | — |
| Business\tacquisition(1) | 1,342 | — | — | — |
| Other\t(2) | (2) | (358) | — | — |
| Foreign\tcurrency\ttranslation\tadjustments | 25 | (44) | — | — |
| Fair\tvalue\tof\tplan\tassets\tat\tend\tof\tyear | 2,059 | 567 | — | — |
| Funded\tstatus\t-\tunderfunded\tat\tend\tof\tyear | $(359) | $(253) | $(187) | $(117) |
| Accumulated\tbenefit\tobligation | $2,373 | $803 | $187 | $117 |

(1) Relates	to	the	acquisition	of	Baker	Hughes	on	July	3, 2017.

(2) Two	UK	pension	plans	merged	into	the	GE	UK	pension	plan	in 2016.

The	amounts	recognized	in	the	consolidated	and	combined	statements	of	financial	position	consist	of	the	following	at	December	31:

|  | Pension	Benefits |  | Other	Postretirement<br>Benefits |  |
| :--- | :--- | :--- | :--- | :--- |
|  | 2017 | 2016 | 2017 | 2016 |
| Noncurrent\tassets | $46 | $— | $— | $— |
| Current\tliabilities | (10) | (4) | (24) | (6) |
| Noncurrent\tliabilities | (395) | (249) | (163) | (111) |
| Net\tamount\trecognized | $(359) | $(253) | $(187) | $(117) |

Information	for	the	plans	with	ABOs	in	excess	of	plan	assets	is	as	follows	at	December	31:

|  | Pension	Benefits | Pension	Benefits | Other	Postretirement<br>Benefits | Other	Postretirement<br>Benefits |
| :--- | :--- | :--- | :--- | :--- |
|  | 2017 | 2016 | 2017 | 2016 |
| Projected\tbenefit\tobligation | $1,692 | $820 | n/a | n/a |
| Accumulated\tbenefit\tobligation | $1,647 | $803 | $187 | $117 |
| Fair\tvalue\tof\tplan\tassets | $1,286 | $567 | n/a | n/a |

# Net	Periodic	Cost

The	components	of	net	periodic	cost	are	as	follows	for	the	years	ended	December	31:

|  |  | Pension	Benefits | Pension	Benefits | Pension	Benefits |  | Other	Postretirement<br>Benefits | Other	Postretirement<br>Benefits |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2017 |  | 2016 |  | 2015 | 2017 | 2016 | 2015 |
| Service\tcost | $37 |  | $18 |  | $24 | $2 | $2 | $3 |
| Interest\tcost | 51 |  | 34 |  | 49 | 6 | 5 | 6 |
| Expected\treturn\ton\tplan\tassets | (81) |  | (46) |  | (65) | — | — | — |
| Amortization\tof\tprior\tservice\tcredit | — |  | — |  | — | (3) | (2) | (1) |
| Amortization\tof\tnet\tactuarial\tloss\t(gain) | 12 |  | 14 |  | 21 | (2) | — | 1 |
| Curtailment\t/\tsettlement\tloss\t(gain) | (45) | (2) | (26) | (1) | 4 | 2 | (2) | (11) |
| Net\tperiodic\tcost | $(26) |  | $(6) |  | $33 | $5 | $3 | $(2) |

(1) Primarily	associated	with	two	UK	plans	merging	into	the	GE	UK	Pension

Plan.

(2) As	a	result	of	the	acquisition	of	Baker	Hughes,	we	obtained	a	non-contributory	pension	plan	(the	Baker	Hughes	Incorporated	Pension	Plan	or	BHIPP).	During the	fourth	quarter	of	2017,	the	Compensation	Committee	of	the	Board	of	Directors	approved	amendments	to	the	BHIPP	to	close	the	plan	to	new	participants and	freeze	accruals	of	future	service-related	benefits	effective	as	of	December	31,	2017.	As	a	result	of	these	actions,	the	Company	recorded	a	curtailment gain	of	$45	million.	The	curtailment	was	recorded	by	the	Company	during	the	fourth	quarter	of	2017	and	included	in	"Other	non-operating	income	(loss),	net" in	our	consolidated	and	combined	statement	of	income	(loss).

# Assumptions	Used	in	Benefit	Calculations

Accounting	requirements	necessitate	the	use	of	assumptions	to	reflect	the	uncertainties	and	the	length	of	time	over	which	the	pension	obligations	will be	paid.	The	actual	amount	of	future	benefit	payments	will	depend	upon	when	participants	retire,	the	amount	of	their	benefit	at	retirement	and	how	long they	live.	To	reflect	the	obligation	in	today's	dollars,	we	discount	the	future	payments	using	a	rate	that	matches	the	time	frame	over	which	the	payments will	be	made.	We	also	need	to	assume	a	long-term	rate	of	return	that	will	be	earned	on	investments	used	to	fund	these	payments.

Weighted	average	assumptions	used	to	determine	benefit	obligations	for	these	plans	are	as	follows	for	the	years	ended	December	31:

|  | Pension	Benefits |  | Other	Postretirement<br>Benefits |  |
| :--- | :--- | :--- | :--- | :--- |
|  | 2017 | 2016 | 2017 | 2016 |
| Discount\trate | 2.99% | 3.41% | 3.32% | 4.00% |
| Rate\tof\tcompensation\tincrease | 3.82% | 4.09% | n/a | n/a |

Weighted	average	assumptions	used	to	determine	net	periodic	cost	for	these	plans	are	as	follows	for	the	years	ended	December	31:

|  |  | Pension	Benefits |  |  | Other	Postretirement<br>Benefits |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2017 | 2016 | 2015 | 2017 | 2016 | 2015 |
| Discount\trate | 3.24% | 3.83% | 3.69% | 3.72% | 4.25% | 4.00% |
| Expected\tlong-term\treturn\ton\tplan\tassets | 6.26% | 6.86% | 6.91% | n/a | n/a | n/a |

We	determine	the	discount	rate	using	a	bond	matching	model,	whereby	the	weighted	average	yields	on	high-quality	fixed-income	securities	have maturities	consistent	with	the	timing	of	benefit	payments.	Lower	discount	rates	increase	the	size	of	the	benefit	obligations	and	pension	expense	in	the following	year;	higher	discount	rates	reduce	the	size	of	the	benefit	obligation	and	subsequent-year	pension	expense.

The	expected	return	on	plan	assets	is	the	estimated	long-term	rate	of	return	that	will	be	earned	on	the	investments	used	to	fund	the	pension obligations.	To	determine	this	rate,	we	consider	the	current	and	target	composition	of	plan	investments,	our	historical	returns	earned,	and	our expectations	about	the	future.

The	compensation	assumption	is	used	to	estimate	the	annual	rate	at	which	pay	of	plan	participants	will	grow.	If	the	rate	of	growth	assumed increases,	the	size	of	the	pension	obligations	will	increase,	as	will	the	amount	recorded	in	equity	attributable	to	parent	and	amortized	to	income	in subsequent	periods.

Assumed	health	care	cost	trend	rates	can	have	a	significant	effect	on	the	amounts	reported	for	Other	Postretirement	Benefits.	As	of	December	31, 2017,	the	health	care	cost	trend	rate	was	 6.81%,	declining	gradually	each	successive	year	until	it	reaches	 4.81%.	A	one	percentage	point	change	in assumed	health	care	cost	trend	rates	would	have	had	the	following	effects	on	2017:

# Accumulated	Other	Comprehensive	Loss

The	amount	recorded	before-tax	in	accumulated	other	comprehensive	loss	related	to	employee	benefit	plans	consists	of	the	following	at December	31:

|  | Pension	Benefits | Pension	Benefits | Other	Postretirement<br>Benefits | Other	Postretirement<br>Benefits |
| :--- | :--- | :--- | :--- | :--- |
|  | 2017 | 2016 | 2017 | 2016 |
| Net\tactuarial\tloss\t(gain) | $117 | $14 | $(16) | $(14) |
| Net\tprior\tservice\tcredit | — | — | (25) | (3) |
| Total | $117 | $14 | $(41) | $(17) |

The	estimated	net	actuarial	loss	for	the	defined	benefit	pension	plans	that	will	be	amortized	from	accumulated	other	comprehensive	loss	and included	in	net	periodic	benefit	cost	in	2018	is	$9	million.	The	estimated	net	actuarial	gain	and	prior	service	credit	for	the	other	postretirement	benefits that	will	be	amortized	from	accumulated	other	comprehensive	loss	and	included	in	net	periodic	benefit	cost	in	2018	is	$2	million	and	$5	million, respectively.

# Plan	Assets

We	have	investment	committees	that	meet	regularly	to	review	the	portfolio	returns	and	to	determine	asset-mix	targets	based	on	asset/liability	studies. Third-party	investment	consultants	assist	such	committees	in	developing	asset	allocation	strategies	to	determine	our	expected	rates	of	return	and expected	risk	for	various	investment

portfolios.	The	investment	committees	considered	these	strategies	in	the	formal	establishment	of	the	current	asset-mix	targets	based	on	the	projected risk	and	return	levels	for	all	major	asset	classes.

The	table	below	presents	the	fair	value	of	the	pension	assets	by	asset	category	at	December	31:

|  | 2017 | 2016 |
| :--- | :--- | :--- |
| Equity\tsecurities |  |  |
| U.S.\tequity\tsecurities\t(1) | $207 | $122 |
| Global\tequity\tsecurities\t (1) | 551 | 149 |
| Debt\tsecurities |  |  |
| Fixed\tincome\tand\tcash\tinvestment\tfunds | 658 | 49 |
| U.S.\tcorporate | 70 | 53 |
| Other\tdebt\tsecurities | 55 | 99 |
| Private\tequities | 107 | 45 |
| Real\testate | 44 | 32 |
| Other\tinvestments\t(2) | 367 | 18 |
| Total\tplan\tassets | $2,059 | $567 |

(1) Include	direct	investments	and	investment

funds.

(2) Substantially	all	represented	hedge	fund	and	asset	allocation	fund

investments.

Plan	assets	valued	using	Net	Asset	Value	(NAV)	as	a	practical	expedient	amounted	to	 $1,684	million	and	$228	million	as	of	December	31,	2017	and 2016,	respectively.	The	percentages	of	plan	assets	valued	using	NAV	by	investment	fund	type	for	equity	securities,	fixed	income	and	cash,	and alternative	investments	were	30%,	28%,	and	24%	as	of	December	31,	2017,	respectively,	and	20%,	7%,	and	13%	as	of	December	31,	2016, respectively.	Those	investments	that	were	measured	at	fair	value	using	NAV	as	practical	expedient	were	excluded	from	the	fair	value	hierarchy.	The practical	expedient	was	not	applied	for	investments	with	a	fair	value	of	$86	million	and	$25	million	in	2017	and	2016,	respectively,	and	those	investments were	classified	within	Level	3.	The	remaining	investments	were	considered	Level	1	and	2.

# Funding	Policy

The	funding	policy	for	our	Pension	Benefits	is	to	contribute	amounts	sufficient	to	meet	minimum	funding	requirements	as	set	forth	in	employee	benefit and	tax	laws	plus	such	additional	amounts	as	we	may	determine	to	be	appropriate.	In	2017,	we	contributed	approximately	$50	million.	We	expect	to contribute	approximately	$44	million	to	our	pension	plans	in	2018.

We	fund	our	Other	Postretirement	Benefits	on	a	pay-as-you-go	basis.	In	2017,	we	contributed	$13	million	to	these	plans.	In	2018,	we	expect	to contribute	approximately	$24	million	to	fund	such	benefits.

The	following	table	presents	the	expected	benefit	payments	over	the	next	10	years.	The	U.S.	and	non-U.S.	pension	benefit	payments	are	made	by the	respective	pension	trust	funds.

| Year | Pension<br>Benefits | Other	Postretirement<br>Benefits |
| :--- | :--- | :--- |
| 2018 | $105 | $24 |
| 2019 | 109 | 22 |
| 2020 | 107 | 17 |
| 2021 | 111 | 12 |
| 2022 | 112 | 10 |
| 2023-2027 | 593 | 47 |

# Other

As	part	of	the	Baker	Hughes	acquisition,	we	obtained	two	non-qualified	defined	contribution	plans	that	are	invested	through	trusts.		The	assets	and corresponding	liabilities	were	$278	million	at	December	31,	2017	and	are	included	in	our	consolidated	and	combined	statement	of	financial	position.

# NOTE	10.	INCOME	TAXES

The	impact	of	U.S.	tax	reform	has	been	recorded	on	a	provisional	basis	as	the	legislation	provides	for	additional	guidance	to	be	issued	by	the	U.S. Department	of	the	Treasury	on	several	provisions	including	the	computation	of	the	transition	tax.	Guidance	in	2018	could	impact	the	information	required for	and	the	calculation	of	the	transition	tax	charge	and	could	affect	decisions	that	affect	the	tax	on	various	U.S.	and	foreign	items	which	would	further impact	the	final	amounts	included	in	the	transition	tax	charge	and	impact	the	revaluation	of	deferred	taxes.	In	addition,	analysis	performed	and conclusions	reached	as	part	of	the	tax	return	filing	process	and	additional	guidance	on	accounting	for	tax	reform	could	affect	the	provisional	amount.	As part	of	purchase	accounting	for	the	Baker	Hughes	acquisition,	we	have	made	preliminary	estimates	of	the	fair	value	of	assets	acquired	and	liabilities assumed.		Accordingly,	changes	to	these	estimates	resulting	from	the	finalization	of	the	fair	values	may	also	require	us	to	adjust	the	provisional	impact	of U.S.	tax	reform.

Additionally,	as	part	of	U.S.	tax	reform,	the	U.S.	has	enacted	a	tax	on	"base	eroding"	payments	from	the	U.S.	and	a	minimum	tax	on	foreign	earnings (global	intangible	low-taxed	income).	Because	aspects	of	the	new	law	and	the	effect	on	our	operations	is	uncertain	and	because	aspects	of	the accounting	rules	associated	with	this	provision	have	not	been	resolved,	we	have	not	made	a	provisional	accrual	for	the	deferred	tax	aspects	of	this provision	and	consequently	have	not	made	an	accounting	policy	election	on	the	deferred	tax	treatment	of	this	tax.

As	a	result	of	enactment	of	U.S.	tax	reform,	we	have	recorded	a	net	tax	benefit	of	 $132	million	in	2017	to	reflect	our	provisional	estimate	of	the revaluation	of	deferred	taxes.	We	also	recorded	tax	expense	of	$271	million	to	reflect	our	provisional	estimate	of	the	transition	tax	charge	on	historic foreign	earnings.	This	transition	tax	charge	is	completely	offset	with	a	tax	benefit	from	a	valuation	allowance	release	on	foreign	tax	credits	available	to offset	the	tax.

The	provision	or	benefit	for	income	taxes	is	comprised	of	the	following	for	the	years	ended	December	31:

|  | 2017 | 2016 | 2015 |
| :--- | :--- | :--- | :--- |
| Current: |  |  |  |
| U.S. | $(33) | $(114) | $158 |
| Foreign | 408 | 325 | 411 |
| Total\tcurrent | 375 | 211 | 569 |
| Deferred: |  |  |  |
| U.S. | (257) | 13 | (21) |
| Foreign | (47) | 26 | (75) |
| Total\tdeferred | (304) | 39 | (96) |
| Provision\tfor\tincome\ttaxes | $71 | $250 | $473 |

The	geographic	sources	of	income	(loss)	before	income	taxes,	inclusive	of	equity	in	loss	of	affiliate	are	as	follows	for	the	years	ended	December	31:

|  | 2017 | 2016 | 2015 |
| :--- | :--- | :--- | :--- |
| U.S. | $(1,153) | $(440) | $(2,006) |
| Foreign | 982 | 1,024 | 1,848 |
| Income\t(loss)\tbefore\tincome\ttaxes,\tinclusive\tof\tequity\tin\tloss\tof\taffiliate | $(171) | $584 | $(158) |

The	benefit	or	provision	for	income	taxes	differs	from	the	amount	computed	by	applying	the	U.S.	statutory	income	tax	rate	to	the	loss	or	income before	income	taxes	for	the	reasons	set	forth	below	for	the	years	ended	December	31:

|  | 2017 | 2016 | 2015 |
| :--- | :--- | :--- | :--- |
| Income\t(loss)\tbefore\tincome\ttaxes,\tinclusive\tof\tequity\tin\tloss\tof\taffiliate | $(171) | $584 | $(158) |
| Taxes\tat\tthe\tU.S.\tfederal\tstatutory\tincome\ttax\trate | (60) | 205 | (55) |
| Effect\tof\tforeign\toperations | (50) | (5) | (137) |
| Tax\timpact\tof\tpartnership\tstructure | 167 | — | — |
| Tax\timpact\tof\tdispositions | — | 1 | (26) |
| Nondeductible\tgoodwill | — | — | 713 |
| Change\tin\tvaluation\tallowances | 169 | 28 | 9 |
| Tax\tCuts\tand\tJobs\tAct\tenactment | (132) | — | — |
| Other\t-\tnet | (23) | 21 | (31) |
| Provision\tfor\tincome\ttaxes | $71 | $250 | $473 |
| Actual\tincome\ttax\trate | (41.5)% | 42.8% | (299.4)% |

Deferred	income	taxes	reflect	the	net	tax	effects	of	temporary	differences	between	the	carrying	amounts	of	assets	and	liabilities	for	financial	reporting purposes	and	the	amounts	used	for	income	tax	purposes,	as	well	as	operating	loss	and	tax	credit	carryforwards.

The	tax	effects	of	our	temporary	differences	and	carryforwards	are	as	follows	at	December	31:

|  | 2017 | 2016 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets: |  |  |
| Receivables | $98 | $— |
| Inventory | 41 | 71 |
| Property | 144 | — |
| Employee\tbenefits | 64 | 154 |
| Investment\tin\tpartnership | 74 | — |
| Other\taccrued\texpenses | 91 | 121 |
| Operating\tloss\tcarryforwards | 1,376 | 142 |
| Tax\tcredit\tcarryforwards | 554 | 5 |
| \t\tOther | 243 | — |
| Total\tdeferred\tincome\ttax\tasset | 2,685 | 493 |
| \t\tValuation\tallowances | (2,474) | (87) |
| Total\tdeferred\tincome\ttax\tasset\tafter\tvaluation\tallowance | 211 | 406 |
| Deferred\ttax\tliabilities: |  |  |
| Goodwill\tand\tother\tintangibles | (202) | (845) |
| \t\tProperty | — | (62) |
| Undistributed\tearnings\tof\tforeign\tsubsidiaries | — | (46) |
| \t\tOther | (51) | (9) |
| Total\tdeferred\tincome\ttax\tliability | (253) | (962) |
| Net\tdeferred\ttax\tliability | $(42) | $(556) |

At	December	31,	2017,	we	had	approximately	 $129	million	of	non-U.S.	tax	credits	which	may	be	carried	forward	indefinitely	under	applicable	foreign law,	$395	million	of	foreign	tax	credits	and	 $30	million	of	other	credits,	the	majority	of	which	will	expire	after	tax	year	2027	under	U.S.	tax	law.	The increase	in	tax	credit	carryforwards	of	approximately	$549	million	is	primarily	due	to	the	generation	of	foreign	tax	credits	under	U.S.	tax	law	related	to	the business	acquisition	referred	to	in	Note	2	partially	offset	by	the	U.S.	tax	reform	transition	tax.	Additionally,	we	had	$1,376	million	of	net	operating	loss carryforwards,	of	which	approximately	$319	million	will	expire	within	five	years,	$293	million	will	expire	between	six	and	20	years,	and	the	remainder	can be	carried	forward	indefinitely.

We	record	a	valuation	allowance	when	it	is	more	likely	than	not	that	some	portion	or	all	of	the	deferred	tax	assets	will	not	be	realized.	The	ultimate realization	of	the	deferred	tax	assets	depends	on	the	ability	to	generate	sufficient	taxable	income	of	the	appropriate	character	in	the	future	and	in	the appropriate	taxing	jurisdictions.	At	December	31,	2017,	$2,474	million	of	valuation	allowances	are	recorded	against	various	deferred	tax	assets,	including foreign	net	operating	losses	(NOL)	of	$1,125	million,	U.S.	federal	and	foreign	tax	credit	carryforwards	of	 $524	million,	other	U.S.	NOL's	and	tax	credit carryforwards	of	$57	million,	and	certain	other	U.S.	and	foreign	deferred	tax	assets	of	 $768	million.	The	increase	of	$2,387	million	in	valuation	allowances are	primarily	related	to	the	business	acquisition.

Due	to	cumulative	losses	in	the	U.S.,	we	concluded	that	valuation	allowances	were	required	on	the	majority	of	our	U.S.	net	deferred	tax	assets, including	foreign	tax	credit	carryforwards.

Certain	other	U.S.	tax	reform	provisions	could	impact	the	amount	of	our	U.S.	valuation	allowance	assessment.	Our	assessment	is	provisional	and amounts	may	be	updated	as	we	finalize	our	accounting	for	U.S.	tax	reform	in	2018.	There	are	$192	million	of	deferred	tax	assets	related	to	foreign	net operating	loss	carryforwards	without	a	valuation	allowance	as	we	expect	that	the	deferred	tax	assets	will	be	realized	within	the	carryforward	period.

Substantially	all	of	our	undistributed	earnings	of	our	foreign	subsidiaries	are	indefinitely	reinvested.	Due	to	the	enactment	of	U.S.	tax	reform, repatriations	of	foreign	earnings	will	generally	be	free	of	U.S.	federal	tax	but	may	incur	other	taxes	such	as	withholding	or	state	taxes.	Indefinite reinvestment	is	determined	by	management's	intentions	concerning	the	future	operations	of	the	Company.	Most	of	these	earnings	have	been	reinvested in	active

non-U.S.	business	operations.	However,	as	a	result	of	U.S.	tax	reform,	substantially	all	of	our	prior	unrepatriated	foreign	earnings	were	subject	to	U.S.	tax and	accordingly	we	expect	to	have	the	ability	to	repatriate	those	earnings	without	incremental	U.S.	federal	tax	cost.	We	expect	that	any	foreign withholding	taxes	on	such	a	repatriation	would	generate	a	U.S.	foreign	tax	credit.	We	will	update	our	analysis	of	investment	of	foreign	earnings	in	2018	as we	consider	the	impact	of	U.S.	tax	reform.	As	of	December	31,	2017,	the	cumulative	amount	of	indefinitely	reinvested	foreign	earnings	is	approximately $8.0	billion.	Computation	of	the	potential	deferred	tax	liability	associated	with	these	undistributed	earnings	and	any	other	basis	differences	is	not practicable.

At	December	31,	2017,	we	had	$395	million	of	tax	liabilities	for	total	gross	unrecognized	tax	benefits	related	to	uncertain	tax	positions.	In	addition	to these	uncertain	tax	positions,	we	had	$95	million	and	$53	million	related	to	interest	and	penalties,	respectively,	for	total	liabilities	of	 $543	million	for uncertain	positions.	If	we	were	to	prevail	on	all	uncertain	positions,	the	net	effect	would	result	in	an	income	tax	benefit	of	approximately	$522	million.	The remaining	$21	million	is	offset	by	deferred	tax	assets	that	represent	tax	benefits	that	would	be	received	in	different	taxing	jurisdictions	in	the	event	that	we did	not	prevail	on	all	uncertain	tax	positions.

We	have	not	provided	for	any	unrecognized	tax	benefits	related	to	U.S.	tax	reform	in	our	provisional	estimate.	The	analysis	performed	and conclusions	reached	as	part	of	the	tax	return	filing	process	and	additional	guidance	on	accounting	for	U.S.	tax	reform	could	affect	the	provisional estimate.

The	following	table	presents	the	changes	in	our	gross	unrecognized	tax	benefits	included	in	the	consolidated	and	combined	statements	of	financial position.

| Asset	/	(Liability) | 2017 | 2016 |
| :--- | :--- | :--- |
| Balance\tat\tJanuary\t1 | $(94) | $(100) |
| Balance\tacquired\tfrom\tBaker\tHughes | (326) | — |
| Additions\tfor\ttax\tpositions\tof\tthe\tcurrent\tyear | (13) | (4) |
| Additions\tfor\ttax\tpositions\tof\tprior\tyears | (19) | — |
| Reductions\tfor\ttax\tpositions\tof\tprior\tyears | 32 | 5 |
| Settlements\twith\ttax\tauthorities | 14 | — |
| Lapse\tof\tstatute\tof\tlimitations | 11 | 5 |
| Balance\tat\tDecember\t31 | $(395) | $(94) |

It	is	expected	that	the	amount	of	unrecognized	tax	benefits	will	change	in	the	next	twelve	months	due	to	expiring	statutes,	audit	activity,	tax payments,	and	competent	authority	proceedings	related	to	transfer	pricing	or	final	decisions	in	matters	that	are	the	subject	of	litigation	in	various	taxing jurisdictions	in	which	we	operate.	At	December	31,	2017,	we	had	approximately	$105	million	of	tax	liabilities,	net	of	 $2	million	of	tax	assets,	related	to uncertain	tax	positions,	each	of	which	are	individually	insignificant,	and	each	of	which	are	reasonably	possible	of	being	settled	within	the	next	twelve months.

At	December	31,	2017,	approximately	$288	million	of	tax	liabilities	for	total	gross	unrecognized	tax	benefits	were	included	in	the	noncurrent	portion	of our	income	tax	liabilities,	for	which	the	settlement	period	cannot	be	determined,	however,	it	is	not	expected	to	be	within	the	next	twelve	months.

We	conduct	business	in	more	than	120	countries	and	are	subject	to	income	taxes	in	most	taxing	jurisdictions	in	which	we	operate.	All	Internal Revenue	Service	examinations	have	been	completed	and	closed	through	year	end	2015	for	the	most	significant	U.S.	returns.	We	believe	there	are	no other	jurisdictions	in	which	the	outcome	of	unresolved	issues	or	claims	is	likely	to	be	material	to	our	results	of	operations,	financial	position	or	cash	flows. We	further	believe	that	we	have	made	adequate	provision	for	all	income	tax	uncertainties.

# NOTE	11.	STOCK-BASED	COMPENSATION

In	July	2017,	we	adopted	the	BHGE	2017	Long-Term	Incentive	Plan	(LTI	Plan)	under	which	we	may	grant	stock	options	and	other	equity-based awards	to	employees	and	non-employee	directors	providing	services	to	the	Company	and	our	subsidiaries.	A	total	of	up	to	57.4	million	shares	of	Class	A common	stock	are	authorized	for

issuance	pursuant	to	awards	granted	under	the	LTI	Plan	over	its	term	which	expires	on	the	date	of	the	annual	meeting	of	the	Company	in	2027.	A	total	of 53.7	million	shares	of	Class	A	common	stock	are	available	for	issuance	as	of	December	31,	2017.

As	a	result	of	the	acquisition	of	Baker	Hughes,	on	 July	3,	2017,	each	outstanding	Baker	Hughes	stock	option	was	converted	into	an	option	to purchase	a	share	of	Class	A	common	stock	in	the	Company.	Consequently,	we	issued	6.8	million	stock	options	which	are	fully	vested.	Each	converted option	is	subject	to	the	same	terms	and	conditions	as	applied	to	the	original	option,	and	the	per	share	exercise	price	of	each	converted	option	was reduced	by	$17.50	to	reflect	the	per	share	amount	of	the	special	dividend	pursuant	to	the	agreement	associated	with	the	Transactions.	Additionally,	as	a result	of	the	acquisition	of	Baker	Hughes,	there	were	1.7	million	Baker	Hughes	restricted	stock	units	(RSUs)	that	were	converted	to	BHGE	RSUs	at	a	fair value	of	$40.18.

Stock-based	compensation	cost	is	measured	at	the	date	of	grant	based	on	the	calculated	fair	value	of	the	award	and	is	generally	recognized	on	a straight-line	basis	over	the	vesting	period	of	the	equity	grant.	The	compensation	cost	is	determined	based	on	awards	ultimately	expected	to	vest; therefore,	we	have	reduced	the	cost	for	estimated	forfeitures	based	on	historical	forfeiture	rates.	Forfeitures	are	estimated	at	the	time	of	grant	and revised,	if	necessary,	in	subsequent	periods	to	reflect	actual	forfeitures.	There	were	no	stock-based	compensation	costs	capitalized	as	the	amounts	were not	material.

During	the	year	ended	December	31,	2017,	we	issued	 2.1	million	RSUs	and	1.6	million	stock	options	under	the	LTI	Plan.	These	RSUs	and	stock options	generally	vest	in	equal	amounts	over	a	three-year	vesting	period	provided	that	the	employee	has	remained	continuously	employed	by	the Company	through	such	vesting	date.

Stock	based	compensation	expense	was	$37	million	in	2017.	Included	in	this	amount	is	$15	million	of	expense	which	relates	to	the	acceleration	of equity	awards	upon	termination	of	employment	of	Baker	Hughes	employees	with	change	in	control	agreements,	and	are	included	as	part	of	"Merger	and related	costs"	in	the	consolidated	and	combined	statements	of	income	(loss).	As	BHGE	LLC	is	a	pass	through	entity,	any	tax	benefit	would	be	recognized by	its	partners.	Due	to	its	cumulative	losses,	BHGE	is	unable	to	recognize	a	tax	benefit	on	its	share	of	stock	related	expenses.

# Stock	Options

The	fair	value	of	each	stock	option	granted	is	estimated	using	the	Black-Scholes	option	pricing	model.	The	following	table	presents	the	weighted average	assumptions	used	in	the	option	pricing	model	for	options	granted	under	the	LTI	Plan.	The	expected	life	of	the	options	represents	the	period	of time	the	options	are	expected	to	be	outstanding.	The	expected	life	is	based	on	a	simple	average	of	the	vesting	term	and	original	contractual	term	of	the awards.	The	expected	volatility	is	based	on	the	historical	volatility	of	our	five	main	competitors	over	a	six	year	period.	The	risk-free	interest	rate	is	based on	the	observed	U.S.	Treasury	yield	curve	in	effect	at	the	time	the	options	were	granted.	The	dividend	yield	is	based	on	a	five	year	history	of	dividend payouts	in	Baker	Hughes.

The	following	table	presents	the	changes	in	stock	options	outstanding	and	related	information	(in	thousands,	except	per	option	prices):

|  | Number	of<br>Options | Weighted	Average<br>Exercise	Price<br>Per	Option	(1) |
| :--- | :--- | :--- |
| Conversion\tof\tBaker\tHughes\tstock\toptions\toutstanding\ton\tJuly\t3,\t2017 | 6,822 | $36.17 |
| Granted | 1,626 | 36.62 |
| Exercised | (261) | 25.66 |
| Forfeited | (28) | 36.89 |
| Expired | (318) | 61.21 |
| Outstanding\tat\tDecember\t31,\t2017 | 7,841 | $35.59 |
| Exercisable\tat\tDecember\t31,\t2017 | 6,243 | $35.33 |

(1) Weighted	average	exercise	price	for	the	converted	stock	options	reflect	a	reduction	of	$17.50	for	the	special dividend.

The	weighted	average	remaining	contractual	term	for	options	outstanding	and	options	exercisable	at	December	31,	2017	were 4.3	years	and 2.9	years,	respectively.	The	maximum	contractual	term	of	options	outstanding	is	9.6	years.

The	total	intrinsic	value	of	stock	options	(defined	as	the	amount	by	which	the	market	price	of	our	common	stock	on	the	date	of	exercise	exceeds	the exercise	price	of	the	option)	exercised	in	2017	was	$3	million.	There	is	no	income	tax	benefit	realized	from	stock	options	exercised	in	2017.

There	were	no	options	that	vested	in	2017.	As	of	December	31,	2017,	there	was	$17	million	of	total	unrecognized	compensation	cost	related	to unvested	stock	options,	which	is	expected	to	be	recognized	over	a	weighted	average	period	of	2.6	years.

The	total	intrinsic	value	of	stock	options	outstanding	at	December	31,	2017	was	 $20	million,	all	of	which	relates	to	options	vested	and	exercisable.	The intrinsic	value	of	stock	options	outstanding	is	calculated	as	the	amount	by	which	the	quoted	price	of	$31.64	of	our	common	stock	as	of	the	end of	2017	exceeds	the	exercise	price	of	the	options.

# Restricted	Stock

In	addition	to	stock	options,	our	officers,	directors	and	key	employees	may	be	granted	restricted	stock	awards	("RSA"),	which	is	an	award	of	common stock	with	no	exercise	price,	or	restricted	stock	units	("RSU"),	where	each	unit	represents	the	right	to	receive,	at	the	end	of	a	stipulated	period,	one unrestricted	share	of	stock	with	no	exercise	price.	RSAs	and	RSUs	are	subject	to	cliff	or	graded	vesting,	generally	ranging	over	a	three	year	period,	or over	a	one	year	period	for	non-employee	directors.	We	determine	the	fair	value	of	restricted	stock	awards	and	restricted	stock	units	based	on	the	market price	of	our	common	stock	on	the	date	of	grant,	discounted	by	the	present	value	of	future	dividends.

The	following	table	presents	the	changes	of	RSUs	and	related	information	(in	thousands,	except	per	unit	prices):

|  | Number	of<br>Units | Weighted	Average<br>Grant	Date	Fair<br>Value	Per	Unit |
| :--- | :--- | :--- |
| Conversion\tof\tBaker\tHughes\tRSUs\toutstanding\ton\tJuly\t3,\t2017 | 1,720 | $40.18 |
| Granted | 2,121 | 36.73 |
| Vested | (471) | 40.18 |
| Forfeited | (84) | 38.09 |
| Unvested\tbalance\tat\tDecember\t31,\t2017 | 3,286 | $38.01 |

The	total	intrinsic	value	of	RSUs	(defined	as	the	value	of	the	shares	awarded	at	the	current	market	price)	vested	and	outstanding	in	2017	was $17 million	and	$38	million,	respectively.	The	total	fair	value	of	RSUs	vested	in	2017	was	$19	million.	As	of	December	31,	2017,	there	was	$98	million	of	total unrecognized	compensation	cost	related	to	unvested	RSUs,	which	is	expected	to	be	recognized	over	a	weighted	average	period	of	2.5	years.

# NOTE	12.	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.	On	July	3,	2017,	each	share	of	Baker	Hughes	common	stock	was	converted	into	one	share of	Class	A	common	stock	in	the	Company.	The	number	of	Class	A	common	stock	and	Class	B	common	stock	shares	outstanding	at	December	31,	2017 is	422	million	and	707	million,	respectively.	We	have	not	issued	any	preferred	stock.	GE	owns	all	the	issued	and	outstanding	Class	B	common	stock. Each	share	of	Class	A	and	Class	B	common	stock	and	the	associated	membership	interest	in	BHGE	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	and	any	assets	in	the	event	of	liquidation	of	the	Company.

Former	Baker	Hughes	stockholders	immediately	after	the	completion	of	the	Transactions	received	a	special	one-time	cash	dividend	of $17.50	per share	paid	by	the	Company	to	holders	of	record	of	the	Company's	Class	A	common	stock.	In	addition,	during	2017	the	Company	declared	and	paid regular	dividends	of	$0.17	per	share	and	$0.18	per	share	to	holders	of	record	of	the	Company's	Class	A	common	stock	during	the	quarters	ended September	30,	2017	and	December	31,	2017,	respectively.

The	following	table	presents	the	changes	in	number	of	shares	outstanding	(in	thousands):

|  | Class	A	Common	Stock | Class	B	Common	Stock |
| :--- | :--- | :--- |
| Balance\tat\tDecember\t31,\t2016 | — | — |
| Issue\tof\tshares\ton\tbusiness\tcombination\tat\tJuly\t3,\t2017 | 427,709 | 717,111 |
| Issue\tof\tshares\tupon\tvesting\tof\trestricted\tstock\tunits\t^(1) | 290 | — |
| Issue\tof\tshares\ton\texercises\tof\tstock\toptions (1) | 256 | — |
| Stock\trepurchase\tprogram\t(2)\t(3) | (6,047) | (10,126) |
| Balance\tat\tDecember\t31,\t2017 | 422,208 | 706,985 |

(1) Share	amounts	reflected	above	are	net	of	shares	withheld	to	satisfy	the	employee's	tax	withholding obligation.

(2) On	November	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	this	repurchase	are	to	be	used	by	BHGE	to	repurchase	Class	A	common	stock	of	the	Company	on	the	open	market,	which	if	fully	implemented would	result	in	the	repurchase	of	approximately	$1.1	billion	of	Class	A	common	stock.	The	Class	B	common	stock	of	the	Company,	that	is	paired	with repurchased	common	units,	was	repurchased	by	the	Company	at	par	value.	The	$3	billion	repurchase	authorization	is	the	aggregate	authorization	for repurchases	of	Class	A	and	Class	B	common	stock	together	with	its	paired	unit.	BHGE	LLC	had	authorization	remaining	to	repurchase	up	to	approximately $2.5	billion	of	its	common	units	from	BHGE	and	GE	at	December	31,	2017.

(3) During	2017,	we	repurchased	and	canceled	6,046,735	shares	of	Class	A	common	stock	for	a	total	of	$187	million.		We	also	repurchased	and	canceled 10,126,467	shares	of	Class	B	common	stock	from	GE	which	is	paired	together	with	common	units	of	BHGE	LLC	for	$314	million.

# ACCUMULATED	OTHER	COMPREHENSIVE	LOSS	(AOCL)

The	following	table	presents	the	changes	in	accumulated	other	comprehensive	loss,	net	of	tax:

|  | Investment<br>Securities | Foreign	Currency<br>Translation<br>Adjustments | Cash	Flow	Hedges | Benefit	Plans | Accumulated	Other<br>Comprehensive	Loss |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tDecember\t31,\t2015 | $— | $(1,384) | $(2) | $(146) | $(1,532) |
| Other\tcomprehensive\tloss\tbefore\treclassifications | — | (423) | (38) | (12) | (473) |
| Amounts\treclassified\tfrom\taccumulated\tother\ncomprehensive\tloss | — | 1 | 37 | 88 | 126 |
| Deferred\ttaxes | — |  | (7) | (22) | (29) |
| Other\tcomprehensive\tincome\t(loss) | — | (422) | (8) | 54 | (376) |
| Less:\tOther\tcomprehensive\tincome\t(loss)\tattributable\tto\nnoncontrolling\tinterests | — | (5) | — | (9) | (14) |
| Balance\tat\tDecember\t31,\t2016 | — | (1,801) | (10) | (83) | (1,894) |
| Other\tcomprehensive\tincome\tbefore\treclassifications | 41 | 7 | 8 | 45 | 101 |
| Amounts\treclassified\tfrom\taccumulated\tother\ncomprehensive\tloss | (39) | — | 7 | 1 | (31) |
| Deferred\ttaxes | 2 | (10) | (3) | 9 | (2) |
| Other\tcomprehensive\tincome\t(loss) | 4 | (3) | 12 | 55 | 68 |
| Less:\tOther\tcomprehensive\tincome\tattributable\tto\nnoncontrolling\tinterests | 3 | 41 | 2 | 37 | 83 |
| Less:\tOther\tadjustments | — | — | — | 13 | 13 |
| Less:\tReallocation\tof\tAOCL\tbased\ton\townership\tof\tGE\nand\tprevious\tBaker\tHughes\tstockholders | — | (1,170) | (1) | (63) | (1,234) |
| Less:\tActivity\trelated\tto\tnoncontrolling\tinterest | — | 5 | — | 8 | 13 |
| Balance\tat\tDecember\t31,\t2017 | $1 | $(680) | $1 | $(23) | $(701) |

The	amounts	reclassified	from	accumulated	other	comprehensive	loss	during	the	years	ended	 December	31,	2017	and	2016	represent	(i)	realized gains	(losses)	on	investment	securities	recorded	in	other	non	operating	income	(loss)	(ii)	gains	(losses)	reclassified	on	cash	flow	hedges	when	the hedged	transaction	occurs	and	(iii)	the	amortization	of	net	actuarial	loss	and	prior	service	credit,	and	curtailments	which	are	included	in	the	computation of	net	periodic	pension	cost	(see	"Note	9.	Employee	Benefit	Plans"	for	additional	details).	Net	periodic	pension	cost	is	recorded	across	the	various	cost and	expense	line	items	within	the	consolidated	and	combined	statement	of	income	(loss).

# NONCONTROLLING	INTEREST

Noncontrolling	interests	represent	the	portion	of	net	assets	in	consolidated	entities	that	are	not	owned	by	the	Company.	As	of	December	31,	2017,	GE owned	approximately	62.5%	of	BHGE	LLC	and	this	represents	the	majority	of	the	noncontrolling	interest	balance	reported	within	equity.

|  | 2017 | 2016 |
| :--- | :--- | :--- |
| GE's\tinterest\tin\tBHGE\tLLC | $24,324 | $— |
| Other\tnoncontrolling\tinterests | 140 | 167 |
| Total\tnoncontrolling\tinterests | $24,464 | $167 |

# NOTE	13.	EARNINGS	PER	SHARE

Basic	and	diluted	net	income	(loss)	per	share	of	Class	A	common	stock	is	presented	below:

The	allocation	of	net	loss	to	holders	of	shares	of	Class	A	common	stock	began	following	the	close	of	the	Transactions	on July	3,	2017.	Therefore,	the earnings	per	share	is	Nil	for	2016	and	2015.	Please	refer	to	"Note	2.	Business	Acquisition"	for	proforma	earnings	per	share.

As	of	July	3,	2017,	GE,	BHGE	and	BHGE	LLC	entered	into	an	Exchange	Agreement	under	which	GE	is	entitled	to	exchange	its	holding	in	Class	B common	stock	and	units	of	BHGE	LLC	for	Class	A	common	stock	on	a	one-for-one	basis	(subject	to	adjustment	in	accordance	with	the	terms	of	the Exchange	Agreement)	or,	at	the	option	of	BHGE,	an	amount	of	cash	equal	to	the	aggregate	value	of	the	shares	of	Class	A	common	stock	that	would have	otherwise	been	received	by	GE	in	the	exchange.	In	computing	the	dilutive	effect,	if	any,	that	the	aforementioned	exchange	would	have	on	net income	(loss)	per	share,	net	income	(loss)	attributable	to	holders	of	Class	A	common	stock	would	be	adjusted	due	to	the	elimination	of	the	noncontrolling interests	associated	with	the	Class	B	common	stock	(including	any	tax	impact).	For	the	year	ended	December	31,	2017,	such	exchange	is	not	reflected in	diluted	net	income	(loss)	per	share	as	the	assumed	exchange	is	not	dilutive.

For	the	year	ended	December	31,	2017,	we	excluded	outstanding	stock	options	and	RSUs	from	the	computation	of	diluted	net	income	(loss)	per share	because	their	effect	is	antidilutive.

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).	As	such,	separate	presentation	of	basic	and	diluted	EPS	of	Class	B	under	the	two	class	method	has	not	been	presented.

# NOTE	14.	FINANCIAL	INSTRUMENTS

Our	assets	and	liabilities	measured	at	fair	value	on	a	recurring	basis	consists	of	derivative	instruments	and	investment	securities.

|  | Level	1 | 2017<br>Level	2 | Level	3 | Net	Balance | Level	1 | 2016<br>Level	2 | Level	3 | Net	Balance |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Assets |  |  |  |  |  |  |  |  |
| Derivatives | $— | $150 | $— | $150 | $— | $318 | $— | $318 |
| \t\t\tInvestment\tsecurities | 81 | 8 | 304 | 393 | — | — | — | — |
| Total\tassets | 81 | 158 | 304 | 543 | — | 318 | — | 318 |
| Liabilities |  |  |  |  |  |  |  |  |
| Derivatives | — | (95) | — | (95) | — | (375) | — | (375) |
| Total\tliabilities | $— | $(95) | $— | $(95) | $— | $(375) | $— | $(375) |

    The	following	table	provides	a	reconciliation	of	recurring	Level	3	fair	value	measurements	for	investment	securities:

| There	were	no	transfers	between	Level	1,	2	and	3	during	 2017. |  |
| :--- | :--- |
| The\tfollowing\ttable\tprovides\ta\treconciliation\tof\trecurring\tLevel\t3\tfair\tvalue\tmeasurements\tfor\tinvestment\tsecurities: |  |
| Balance\tat\tDecember\t31,\t2016 | $— |
| Additions\tas\ta\tresult\tof\tbusiness\tcombination | 179 |
| Purchases | 186 |
| Proceeds\tat\tmaturity | (62) |
| Unrealized\tgains\trecognized\tin\taccumulated\tother\tcomprehensive\tincome\t(loss) | 1 |
| Balance\tat\tDecember\t31,\t2017 | $304 |

The	most	significant	unobservable	input	used	in	the	valuation	of	our	Level	3	instruments	is	the	discount	rate.	Discount	rates	are	determined	based on	inputs	that	market	participants	would	use	when	pricing	investments,	including	credit	and	liquidity	risk.	An	increase	in	the	discount	rate	would	result	in	a decrease	in	the	fair	value	of	our	investment	securities.	There	are	no	unrealized	gains	or	losses	recognized	in	the	consolidated	and	combined	statement of	income	(loss)	on	account	of	any	Level	3	instrument	still	held	at	the	reporting	date.	We	hold	$127	million	of	these	investment	securities	on	behalf	of	GE.

|  | Amortized	cost | Gross	unrealized<br>gains | Gross<br>unrealized<br>losses | Estimated	fair<br>value | Amortized	cost | Gross<br>unrealized	gains | Gross<br>unrealized<br>losses | Estimated	fair<br>value |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Investment\tsecurities |  |  |  |  |  |  |  |  |
| Non-U.S.\tdebt\tsecurities | $310 | $2 | $— | $312 | $— | $— | $— | $— |
| \t\t\tEquity\tsecurities | 81 | — | — | 81 | 1 | — | — | 1 |
| Total | $391 | $2 | $— | $393 | $1 | $— | $— | $1 |

All	of	our	investment	securities	are	classified	as	available	for	sale	instruments.	Non-U.S.	debt	securities	mature	in	three	years.

# FAIR	VALUE	DISCLOSURE	OF	FINANCIAL	INSTRUMENTS

Our	financial	instruments	include	cash	and	equivalents,	current	receivables,	investments,	accounts	payable,	short	and	long-term	debt,	and	derivative financial	instruments.	Except	for	long-term	debt,	the	estimated	fair	value	of	these	financial	instruments	at	December	31,	2017	and	December	31,	2016 approximates	their	carrying	value	as	reflected	in	our	consolidated	and	combined	financial	statements.	For	further	information	on	the	fair	value	of	our	debt, see	"Note	8.	Borrowings."

# DERIVATIVES	AND	HEDGING

We	use	derivatives	to	manage	our	risks	and	do	not	use	derivatives	for	speculation.

The	table	below	summarizes	the	fair	value	of	all	derivatives,	including	hedging	instruments	and	embedded	derivatives.

|  | 2017<br>Assets | (Liabilities) | 2016<br>Assets | (Liabilities) |
| :--- | :--- | :--- | :--- | :--- |
| Derivatives\taccounted\tfor\tas\thedges |  |  |  |  |
| Currency\texchange\tcontracts | $6 | $— | $2 | $(9) |
| Derivatives\tnot\taccounted\tfor\tas\thedges |  |  |  |  |
| Currency\texchange\tcontracts | 144 | (95) | 316 | (366) |
| Total\tderivatives | $150 | $(95) | $318 | $(375) |

Derivatives	are	classified	in	the	captions	"All	other	current	assets,"	"All	other	assets,"	"All	other	current	liabilities,"	and	"All	other	liabilities"	depending on	their	respective	maturity	date.

# RISK	MANAGEMENT	STRATEGY

We	buy,	manufacture	and	sell	components	and	products	as	well	as	provide	services	across	global	markets.	These	activities	expose	us	to	changes	in foreign	currency	exchange	rates	and	commodity	prices,	which	can	adversely	affect	revenue	earned	and	costs	of	operating	our	business.	When	the currency	in	which	we	sell	equipment	differs	from	the	primary	currency	(known	as	its	functional	currency)	and	the	exchange	rate	fluctuates,	it	will	affect	the revenue	we	earn	on	the	sale.	These	sales	and	purchase	transactions	also	create	receivables	and	payables	denominated	in	foreign	currencies,	along	with other	monetary	assets	and	liabilities,	which	expose	us	to	foreign	currency	gains	and	losses	based	on	changes	in	exchange	rates.	Changes	in	the	price	of a	raw	material	that	we	use	in	manufacturing	can	affect	the	cost	of	manufacturing.	We	use	derivatives	to	mitigate	or	eliminate	these	exposures.

# FORMS	OF	HEDGING

# Cash	flow	hedges

We	use	cash	flow	hedging	primarily	to	reduce	or	eliminate	the	effects	of	foreign	exchange	rate	changes	on	purchase	and	sale	contracts.	Accordingly, the	vast	majority	of	our	derivative	activity	in	this	category	consists	of	currency	exchange	contracts.	We	also	use	commodity	derivatives	to	reduce	or eliminate	price	risk	on	raw	materials	purchased	for	use	in	manufacturing.

Under	hedge	accounting,	the	derivative	carrying	amount	is	measured	at	fair	value	each	period	and	any	resulting	gain	or	loss	is	recorded	in	a separate	component	of	equity.	Differences	between	the	derivative	and	the	hedged	item	may	cause	changes	in	their	fair	values	to	not	offset	completely, which	is	referred	to	as	ineffectiveness.	When	the	hedged	transaction	occurs,	these	amounts	are	released	from	equity,	in	order	that	the	transaction	will	be reflected	in	earnings	at	the	rate	locked	in	by	the	derivative.	The	effect	of	the	hedge	is	reported	in	the	same	financial	statement	line	item	as	the	earnings effects	of	the	hedged	transaction.

The	following	table	explains	the	effect	of	changes	in	market	rates	on	the	fair	value	of	derivatives	we	use	most	commonly	in	cash	flow	hedging arrangements.

# Economic	Hedges

These	derivatives	are	not	designated	as	hedges	from	an	accounting	standpoint	(and	therefore	we	do	not	apply	hedge	accounting	to	the	relationship) but	otherwise	serve	the	same	economic	purpose	as	other	hedging	arrangements.	Some	economic	hedges	are	used	when	changes	in	the	carrying amount	of	the	hedged	item	are	already	recorded	in	earnings	in	the	same	period	as	the	derivative,	making	hedge	accounting	unnecessary.	For	some	other types	of	economic	hedges,	changes	in	the	fair	value	of	the	derivative	are	recorded	in	earnings	currently	but	changes	in	the	value	of	the	forecasted	foreign currency	cash	flows	are	only	recognized	in	earnings	when	they	occur.	As	a	result,	even	though	the	derivative	is	an	effective	economic	hedge,	there	is	a net	effect	on	earnings	in	each	period	due	to	differences	in	the	timing	of	earnings	recognition	between	the	derivative	and	the	hedged	item.

These	derivatives	are	marked	to	fair	value	through	earnings	each	period.	The	effects	are	reported	in	"Selling,	general	and	administrative	expenses" in	the	consolidated	and	combined	statement	of	income	(loss).	In	general,	the	income	(loss)	effects	of	the	hedged	item	are	recorded	in	the	same consolidated	and	combined	financial	statement	line	as	the	derivative.	The	income	(loss)	effect	of	economic	hedges,	after	considering	offsets	related	to income	(loss)	effects	of	hedged	assets	and	liabilities,	is	substantially	offset	by	changes	in	the	fair	value	of	forecasted	transactions	that	have	not	yet affected	income	(loss).

The	table	below	explains	the	effects	of	market	rate	changes	on	the	fair	value	of	derivatives	we	use	most	commonly	as	economic	hedges.

			Pay	U.S.	dollars/receive	foreign	currency 			Receive	U.S.	dollars/pay	foreign	currency

U.S.	dollar	strengthens U.S.	dollar	weakens Fair	value	decreases Fair	value	increases Fair	value	increases Fair	value	decreases

# NOTIONAL	AMOUNT	OF	DERIVATIVES

The	notional	amount	of	a	derivative	is	the	number	of	units	of	the	underlying	(for	example,	the	notional	principal	amount	of	the	debt	in	an	interest	rate swap).	A	substantial	majority	of	the	outstanding	notional	amount	of	$10.2	billion	and	$7.1	billion	at	December	31,	2017	and	December	31,	2016, respectively,	is	related	to	hedges	of	anticipated	sales	and	purchases	in	foreign	currency,	commodity	purchases,	and	contractual	terms	in	contracts	that are	considered	embedded	derivatives	and	for	intercompany	borrowings	in	foreign	currencies.	We	generally	disclose	derivative	notional	amounts	on	a gross	basis	to	indicate	the	total	counterparty	risk.	Where	we	have	gross	purchase	and	sale	derivative	contracts	for	a	particular	currency,	we	look	to execute	these	contracts	with	the	same	counterparty	to	reduce	our	exposure.	The	corresponding	net	notional	amounts	were	$3.3	billion	at	December	31, 2017	and	$0.6	billion	at	December	31,	2016.

The	table	below	provides	additional	information	about	how	derivatives	are	reflected	in	our	consolidated	and	combined	financial	statements.

| Carrying	amount	related	to	derivatives | 2017 | 2016 |
| :--- | :--- | :--- |
| Derivative\tassets | $150 | $318 |
| Derivative\tliabilities | (95) | (375) |
| Net\tderivatives | $55 | $(57) |

# EFFECTS	OF	DERIVATIVES	ON	EARNINGS

All	derivatives	are	marked	to	fair	value	on	our	consolidated	and	combined	statement	of	financial	position,	whether	they	are	designated	in	a	hedging relationship	for	accounting	purposes	or	are	used	as	economic	hedges.	As	discussed	in	the	previous	sections,	each	type	of	hedge	affects	the	financial statements	differently.	In	some	economic	hedges,	both	the	hedged	item	and	the	hedging	derivative	offset	in	earnings	in	the	same	period.	In	other economic	hedges,	the	hedged	item	and	the	hedging	derivative	offset	in	earnings	in	different	periods.	In	cash	flow,	the	effective	portion	of	the	hedging derivative	is	offset	in	separate	components	of	equity	and	ineffectiveness	is	recognized	in	earnings.	The	table	below	summarizes	these	offsets	and	the	net effect	on	pre-tax	earnings.

|  | 2017 |  | 2016 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Cash\tflow\thedges | Economic\thedges | Cash\tflow\thedges | Economic\thedges |
| Effect\ton\thedging\tinstrument | $8 | $121 | $38 | $(272) |
| Effect\ton\tunderlying | (8) | (152) | (38) | 102 |
| Effect\ton\tearnings\t(1) | — | (31) | — | (170) |

(1) For	cash	flow	hedges,	the	effect	on	earnings,	if	any,	is	primarily	related	to	ineffectiveness.	For	economic	hedges	on	forecasted	transactions,	the	effect	on earnings	is	substantially	offset	by	future	earnings	on	economically	hedged	items.

Changes	in	the	fair	value	of	cash	flow	hedges	are	recorded	in	a	separate	component	of	equity	(referred	to	below	as	Accumulated	Other Comprehensive	Income,	or	AOCI)	and	are	recorded	in	earnings	in	the	period	in	which

the	hedged	transaction	occurs.	The	table	below	summarizes	this	activity	by	hedging	instrument.

|  | Gain	(loss)	recognized	in	AOCI | Gain	(loss)	recognized	in	AOCI | Gain	(loss)	reclassified	from	AOCI	to<br>earnings | Gain	(loss)	reclassified	from	AOCI	to<br>earnings |
| :--- | :--- | :--- | :--- | :--- |
|  | 2017 | 2016 | 2017 | 2016 |
| Currency\texchange\tcontracts | $8 | $(38) | $(7) | $(37) |

We	expect	to	transfer	an	insignificant	amount	to	earnings	as	an	expense	in	the	next	12	months	contemporaneously	with	the	earnings	effects	of	the related	forecast	transactions.	At	December	31,	2017	and	2016,	the	maximum	term	of	derivative	instruments	that	hedge	forecast	transactions	was	 three- years	and	two-years,	respectively.	See	"Note	12.	Equity"	for	additional	information	about	reclassification	out	of	accumulated	other	comprehensive income.

For	cash	flow	hedges,	the	amount	of	ineffectiveness	in	the	hedging	relationship	and	amount	of	the	changes	in	fair	value	of	the	derivatives	that	are not	included	in	the	measurement	of	ineffectiveness	were	insignificant	for	each	reporting	period.

# 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	15.	SEGMENT	INFORMATION

Our	operating	segments	are	organized	based	on	the	nature	of	markets	and	customers.	Following	the	Transactions,	we	revised	our	segment	structure and	began	to	manage	and	report	our	operating	results	through	four	operating	segments	as	defined	below.	We	have	reflected	this	revised	structure	for	all historical	periods	presented.

Oilfield	Services	provides	products	and	services	for	onshore	and	offshore	operations	across	the	lifecycle	of	a	well,	ranging	from	drilling,	evaluation, completion,	production	and	intervention.	Products	and	services	include	diamond	and	tri-cone	drill	bits,	drilling	services,	including	directional	drilling technology,	measurement	while	drilling	&	logging	while	drilling,	downhole	completion	tools	and	systems,	wellbore	intervention	tools	and	services,	wireline services,	drilling	and	completions	fluids,	oilfield	and	industrial	chemicals,	pressure	pumping,	and	artificial	lift	technologies,	including	electrical	submersible pumps.

Oilfield	Equipment	provides	a	broad	portfolio	of	products	and	services	required	to	facilitate	the	safe	and	reliable	flow	of	hydrocarbons	from	the	subsea wellhead	to	the	surface.	Products	and	services	include	pressure	control	equipment	and	services,	subsea	production	systems	and	services,	drilling equipment,	and	flexible	pipeline	systems.	Oilfield	Equipment	designs	and	manufactures	onshore	and	offshore	drilling	and	production	systems	and equipment	for	floating	production	platforms	and	provides	a	full	range	of	services	related	to	onshore	and	offshore	drilling	activities.

Turbomachinery	&	Process	Solutions	provides	equipment	and	related	services	for	mechanical-drive,	compression	and	power-generation	applications across	the	oil	and	gas	industry	as	well	as	products	and	services	to	serve	the	downstream	segments	of	the	industry	including	refining,	petrochemical, distributed	gas,	flow	and	process	control	and	other	industrial	applications.		The	Turbomachinery	&	Process	Solutions	portfolio	includes	drivers	(aero- derivative	gas	turbines,	heavy-duty	gas	turbines	and	synchronous	and	induction	electric	motors),	compressors	(centrifugal	and	axial,	direct	drive	high speed,	integrated,	subsea	compressors,	turbo	expanders	and	reciprocating),

turn-key	solutions	(industrial	modules	and	waste	heat	recovery),	pumps,	valves,	and	compressed	natural	gas	(CNG)	and	small-scale	liquefied	natural	gas (LNG)	solutions	used	primarily	for	shale	oil	and	gas	field	development.

Digital	Solutions	provides	equipment	and	services	for	a	wide	range	of	industries,	including	oil	&	gas,	power	generation,	aerospace,	metals,	and transportation.	The	offerings	include	sensor-based	measurement,	non-destructive	testing	and	inspection,	turbine,	generator	and	plant	controls	and condition	monitoring,	as	well	as	pipeline	integrity	solutions.

# SEGMENT	RESULTS

Summarized	financial	information	is	shown	in	the	following	tables.	Consistent	accounting	policies	have	been	applied	by	all	segments	within	the Company,	for	all	reporting	periods.	The	current	year	results,	and	balances,	may	not	be	comparable	to	prior	years	as	the	current	year	includes	the	results of	Baker	Hughes	from	July	3,	2017.

| Segment	revenue | 2017 | 2016 | 2015 |
| :--- | :--- | :--- | :--- |
| Oilfield\tServices | $5,851 | $799 | $1,411 |
| Oilfield\tEquipment | 2,637 | 3,547 | 5,060 |
| Turbomachinery\t&amp;\tProcess\tSolutions | 6,463 | 6,837 | 7,985 |
| Digital\tSolutions | 2,309 | 2,086 | 2,232 |
| Total | $17,259 | $13,269 | $16,688 |

The	performance	of	our	operating	segments	is	evaluated	based	on	segment	operating	income	(loss),	which	is	defined	as	income	(loss)	before	income taxes	and	equity	in	loss	of	affiliate	and	before	the	following:	net	interest	expense,	net	other	non	operating	income	(loss),	corporate	expenses, restructuring,	impairment	and	other	charges,	inventory	impairments,	merger	and	related	costs,	goodwill	impairments	and	certain	gains	and	losses	not allocated	to	the	operating	segments.

| Segment	income	(loss)	before	income	taxes | 2017 | 2016 | 2015 |
| :--- | :--- | :--- | :--- |
| Oilfield\tServices | $71 | $(204) | $(79) |
| Oilfield\tEquipment | 38 | 320 | 677 |
| Turbomachinery\t&amp;\tProcess\tSolutions | 853 | 1,255 | 1,684 |
| Digital\tSolutions | 333 | 355 | 409 |
| Total\tsegment | 1,295 | 1,726 | 2,691 |
| Corporate | (373) | (380) | (260) |
| Inventory\timpairment\tand\trelated\tcharges\t (1) | (244) | (138) | (51) |
| Restructuring,\timpairment\tand\tother | (412) | (516) | (411) |
| Goodwill\timpairment | — | — | (2,080) |
| Merger\tand\trelated\tcosts | (373) | (33) | (27) |
| Other\tnon\toperating\tincome\t(loss),\tnet | 78 | 27 | 100 |
| Interest\texpense,\tnet | (131) | (102) | (120) |
| Total | $(160) | $584 | $(158) |

The	following	table	presents	total	assets	by	segment	at	December	31:

| Segments	assets | 2017 | 2016 |
| :--- | :--- | :--- |
| Oilfield\tServices\t(1) | $32,761 | $4,046 |
| Oilfield\tEquipment | 7,682 | 8,744 |
| Turbomachinery\t&amp;\tProcess\tSolutions | 9,712 | 8,565 |
| Digital\tSolutions | 3,831 | 3,113 |
| Total\tsegment | 53,986 | 24,468 |
| Corporate\tand\teliminations\t (2) | 3,064 | (2,747) |
| Total | $57,050 | $21,721 |

(1) Goodwill	acquired	as	a	result	of	the	Baker	Hughes	acquisition	has	been	preliminarily	allocated	to	Oilfield	Services.	See	"Note	6.	Goodwill	and	Other Intangible	Assets"	for	further	details.

(2) Corporate	and	eliminations	in	total	segment	assets	includes	adjustments	of	intercompany	investments	and	receivables	that	are	reflected	within	the	total assets	of	the	four	reportable	segments.

The	following	table	presents	depreciation	and	amortization	by	segment	for	the	years	ended	December	31:

| Segment	depreciation	and	amortization | 2017 | 2016 | 2015 |
| :--- | :--- | :--- | :--- |
| Oilfield\tServices | $613 | $132 | $164 |
| Oilfield\tEquipment | 187 | 154 | 178 |
| Turbomachinery\t&amp;\tProcess\tSolutions | 174 | 186 | 138 |
| Digital\tSolutions | 119 | 78 | 50 |
| Total\tSegment | 1,093 | 550 | 530 |
| Corporate | 10 | — | — |
| Total | $1,103 | $550 | $530 |

The	following	tables	present	consolidated	revenue	based	on	the	location	to	where	the	product	is	shipped	or	the	services	are	performed	for	the	years ended	December	31,	and	net	property,	plant	and	equipment	by	its	geographic	location	at	December	31.

| Revenue | 2017 | 2016 | 2015 |
| :--- | :--- | :--- | :--- |
| U.S. | $4,350 | $3,164 | $4,334 |
| Non-U.S. | 12,909 | 10,105 | 12,354 |
| Total | $17,259 | $13,269 | $16,688 |

| Property,	plant	and	equipment	-	net | 2017 | 2016 | 2015 |
| :--- | :--- | :--- | :--- |
| U.S. | $4,054 | $833 | $954 |
| Non-U.S. | 2,905 | 1,492 | 1,600 |
| Total | $6,959 | $2,325 | $2,554 |

# NOTE	16.	RELATED	PARTY	TRANSACTIONS

GE	and	its	affiliates	have	provided	and	continue	to	provide	a	variety	of	services	to	us.

In	connection	with	the	Transactions	on	July	3,	2017,	we	entered	into	various	agreements	with	GE	and	its	affiliates	that	govern	our	relationship	with GE	following	the	Transactions	including	an	Intercompany	Services	Agreement	pursuant	to	which	GE	and	its	affiliates	and	the	Company	will	provide certain	services	to	each	other.	GE	will	provide	certain	administrative	services,	GE	proprietary	technology	and	use	of	certain	GE	trademarks	in consideration	for	a	payment	of	$55	million	per	year.	GE	may	also	provide	us	with	certain	additional	administrative	services	under	the	Intercompany Services	Agreement,	not	included	as	consideration	for	the	$55	million	per	year	payment,	and	the	fees	for	such	services	are	based	on	actual	usage	of such	services	and	historical	GE	intercompany	pricing.	In	addition,	we	will	provide	GE	and	its	affiliates	with	confidential	access	to	certain	of	our	proprietary technology	and	related	developments	and	enhancements	thereto	related	to	GE's	operations,	products	or	service	offerings.	We	recognized	a	cost	of	$28 million	for	the	year	ended	December	31,	2017	for	services	provided	by	GE	and	its	affiliates	subsequent	to	the	close	of	the	Transactions.

Prior	to	the	Transactions,	GE	and	its	affiliates	provided	a	variety	of	services	and	funding	to	us.	The	cost	of	these	services	was	either	(a)	recognized through	our	allocated	portion	of	GE's	corporate	overhead;	or	(b)	billed	directly	to	us.	Costs	of	$103	million,	$210	million	and	$180	million	for	the	year ended	December	31,	2017,	2016	and	2015,	respectively,	were	recorded	in	our	consolidated	and	combined	statement	of	income	(loss)	in	respect	of services	provided	by	GE	and	its	affiliates	prior	to	the	close	of	the	Transactions.

# EMPLOYEE	BENEFITS

Certain	of	our	employees	are	covered	under	various	GE	sponsored	employee	benefit	plans,	including	GE's	retirement	plans	(pension,	retiree	health and	life	insurance,	and	savings	benefit	plans)	and	active	health	and	life	insurance	benefit	plans.	Further	details	are	provided	in	"Note	9.	Employee	Benefit Plans."

# RELATED	PARTY	BALANCES

In	connection	with	the	Transactions,	as	of	 July	3,	2017,	we	were	required	to	repay	any	cash	in	excess	of	 $100	million,	net	of	any	third-party	debt	in GE	O&G,	to	GE.	Due	to	the	restricted	nature	of	the	majority	of	this	excess	cash,	we	continue	to	hold	this	cash	on	behalf	of	GE	until	such	cash	is unrestricted	and	available	for	repayment	to	GE.	The	restriction	arises	as	the	majority	of	the	cash	cannot	be	released,	transferred	or	otherwise	converted into	a	non-restricted	market	currency	due	to	the	lack	of	market	liquidity,	capital	controls	or	similar	monetary	or	exchange	limitations	by	a	Government entity	of	the	jurisdiction	in	which	such	cash	is	situated.	Accordingly,	on	July	3,	2017,	we	executed	a	promissory	note	with	GE.		There	is	no	maturity	date on	the	promissory	note,	but	we	remain	obligated	to	repay	GE	such	excess	cash	together	with	any	income	or	loss	we	may	incur	on	it,	therefore,	this obligation	is	reflected	as	short-term	borrowings.	As	of	December	31,	2017,	of	the	amount	due	to	GE	of	$1,124	million,	$997	million	was	held	in	the	form of	cash	and	$127	million	was	held	in	the	form	of	investment	securities.	A	corresponding	liability	is	reported	in	short-term	borrowings	in	the	consolidated and	combined	statements	of	financial	position.

# RECEIVABLES	MONETIZATION

We	monetized	a	portion	of	our	current	receivables	through	programs	established	for	GE	and	various	GE	subsidiaries.	During	the	three	months	ended December	31,	2017,	we	ceased	to	participate	in	the	GE	receivables	monetization	program.

Under	the	receivable	monetization	program,	we	factored	U.S.	and	non-U.S.	receivables	to	GE	Capital	on	a	recourse	and	nonrecourse	basis	pursuant to	various	factoring	and	services	agreements,	purchased	directly	by	Working	Capital	Solutions	(WCS),	an	operating	unit	of	GE	Capital	or	sold	to	external investors	through	WCS	agent	arranger	or	buy/sell	structures.	Under	the	factoring	programs,	GE	Capital	performed	a	risk	analysis	and	allocated	a

nonrecourse	credit	limit	for	each	customer.	If	the	portfolio	exceeded	this	credit	limit,	then	the	receivable	was	factored	with	recourse.	The	evaluation	of whether	recourse	transactions	qualify	for	accounting	derecognition	is	based,	in	part,	upon	the	legal	jurisdiction	of	the	sales,	as	such,	the	majority	of recourse	transactions	outside	the	U.S.	qualify	for	sale	treatment.	The	Company	has	$116	million	and	$198	million	at	December	31,	2017	and December	31,	2016,	respectively,	of	accounts	payable	to	GE	that	relate	to	cash	collected	on	current	receivables	under	this	monetization	program.	In addition,	prior	to	the	Transactions,	we	participated	in	the	GE	Accounts	Receivable	(GEAR)	program,	in	which	we	transferred	our	receivables	into	a securitization	structure	administered	by	GE	Capital	through	the	GE	Receivables	and	Sale	Contribution	Agreement.

The	outstanding	balances	of	receivables	that	were	transferred	to	GE	under	WCS	administered	programs	and	are	accounted	for	as	sales	were $225 million	and	$2,168	million	as	of	December	31,	2017	and	2016,	respectively.

Under	the	programs,	we	retain	the	responsibility	for	servicing	the	receivables	and	remitting	collections	to	the	owner	and	the	lenders	for	a	fee	equal	to the	prevailing	market	rate	for	such	services.	We	have	outsourced	our	servicing	responsibilities	to	GE	Capital	for	a	market-based	fee	and	accordingly,	no servicing	asset	or	liability	has	been	recorded	on	the	consolidated	and	combined	statements	of	financial	position	as	of	December	31,	2017	and December	31,	2016.	Under	the	programs,	we	incurred	interest	expense	and	finance	charges	of	$59	million,	$91	million	and	$93	million	for	the	years ended	December	31,	2017,	2016	and	2015,	respectively,	which	is	reflected	in	the	consolidated	and	combined	statements	of	income	(loss).

# TRADE	PAYABLES	ACCELERATED	PAYMENT	PROGRAM

Our	North	American	operations	participate	in	accounts	payable	programs	with	GE	Capital.	Invoices	are	settled	with	vendors	per	our	payment	terms	to obtain	cash	discounts.	GE	Capital	provides	funding	for	invoices	eligible	for	a	cash	discount.	Our	liability	associated	with	the	funded	participation	in	the accounts	payable	programs,	which	is	presented	as	accounts	payable	within	the	consolidated	and	combined	statements	of	financial	position,	was	$293 million	and	$104	million	as	of	December	31,	2017	and	December	31,	2016,	respectively.

# PARENT'S	NET	INVESTMENT

At	December	31,	2016,	the	remainder	of	GE's	total	investment,	in	excess	of	our	debt	from	GE,	is	reflected	as	equity	under	the	caption	"Parent's	net investment"	in	our	consolidated	and	combined	statements	of	financial	position.	At	December	31,	2017,	GE's	equity	ownership	is	reflected	in noncontrolling	interest	in	our	consolidated	and	combined	statements	of	financial	position.

The	Company	has	$575	million	and	$228	million	of	accounts	payable	at	December	31,	2017	and	2016,	respectively,	for	services	provided	by	GE	in the	ordinary	course	of	business.	The	Company	has	$801	million	and	$392	million	of	current	receivables	at	December	31,	2017	and	2016,	respectively,	for services	provided	to	GE	in	the	ordinary	course	of	business.

Prior	to	the	Transactions,	GE	provided	guarantees,	letters	of	credit,	and	other	support	arrangements	on	our	behalf.	We	provide	guarantees	to	GE Capital	on	behalf	of	some	customers	who	have	entered	into	financing	arrangements	with	GE	Capital.

Prior	to	the	Transactions,	a	certain	number	of	our	employees	were	granted	GE	stock	options	and	RSUs	under	GE's	2007	Long-Term	Incentive	Plan. Our	consolidated	and	combined	financial	statements	include	compensation	expense	related	to	these	awards	for	the	portion	of	an	employee's	vesting period	that	accrued	during	employment	with	us.

At	closing,	BHGE,	GE	and	BHGE	LLC	entered	into	a	Tax	Matters	Agreement.	The	Tax	Matters	Agreement	governs	the	administration	and	allocation between	the	parties	of	tax	liabilities	and	benefits	arising	prior	to,	as	a	result	of,	and	subsequent	to	the	Transactions,	including	certain	restructuring transactions	in	connection	therewith,

and	the	respective	rights,	responsibilities	and	obligations	of	GE	and	BHGE,	with	respect	to	various	other	tax	matters.	GE	will	be	responsible	for	certain taxes	related	to	the	formation	of	the	transaction	undertaken	by	GE	and	Baker	Hughes	and	their	respective	subsidiaries.	GE	has	assumed	approximately $33	million	of	tax	obligations	of	Baker	Hughes	related	to	the	formation	of	the	transaction.

Following	the	closing	of	the	Transactions,	BHGE	or	BHGE	LLC	(or	their	respective	subsidiaries)	may	be	included	in	group	tax	returns	with	GE.	To	the extent	included	in	such	group	tax	returns,	(i)	GE	will	be	required	to	pay	BHGE	or	BHGE	LLC	to	the	extent	such	separate	tax	returns	include	net	operating losses	that	are	used	to	reduce	taxes	payable	by	GE	with	respect	to	the	applicable	group	tax	return,	and	(ii)	BHGE	or	BHGE	LLC	will	be	required	to	make tax	sharing	payments	to	GE	in	an	amount	intended	to	approximate	the	amount	that	such	entity	would	have	paid	if	it	had	not	been	included	in	such	group tax	returns	and	had	filed	separate	tax	returns.

The	Tax	Matters	Agreement	also	provides	for	the	sharing	of	certain	tax	benefits	(i)	arising	from	the	Transactions,	including	restructuring	transactions, and	(ii)	resulting	from	allocations	of	tax	items	by	BHGE	LLC.	GE	is	entitled	to	100%	of	these	tax	benefits	to	the	extent	that	GE	has	borne	certain	taxes related	to	the	formation	of	the	transaction	which	are	currently	estimated	to	be	$33	million.	Thereafter,	these	tax	benefits	will	be	shared	by	GE	and	BHGE in	accordance	with	their	economic	ownership	of	BHGE	LLC,	which	will	initially	be	approximately	62.5%	and	approximately	37.5%,	respectively.	The sharing	of	tax	benefits	generally	is	expected	to	result	in	cash	payments	by	BHGE	LLC	to	its	members.	Any	such	cash	payments	may	be	subject	to adjustment	based	on	certain	subsequent	events,	including	tax	audits	or	other	determinations	as	to	the	availability	of	the	tax	benefits	with	respect	to	which such	cash	payments	were	previously	made.

# NOTE	17.	COMMITMENTS	AND	CONTINGENCIES

# LEASES

At	December	31,	2017,	we	had	long-term	non-cancelable	operating	leases	covering	certain	facilities	and	equipment.	The	minimum	annual	rental commitments,	net	of	amounts	due	under	subleases,	for	each	of	the	five	years	in	the	period	ending	December	31,	2021	are	$156	million,	$119	million, $95	million,	$76	million	and	$54	million,	respectively,	and	$188	million	in	the	aggregate	thereafter.	Rent	expense	was	$360	million,	$200	million	and	$206 million	for	the	years	ended	December	31,	2017,	2016	and	2015,	respectively.	We	did	not	enter	into	any	significant	capital	leases	during	the	three	years ended	December	31,	2017.

# LITIGATION

We	are	subject	to	a	number	of	lawsuits	and	claims	arising	out	of	the	conduct	of	our	business.	The	ability	to	predict	the	ultimate	outcome	of	such matters	involves	judgments,	estimates	and	inherent	uncertainties.	We	record	a	liability	for	those	contingencies	where	the	incurrence	of	a	loss	is	probable and	the	amount	can	be	reasonably	estimated,	including	accruals	for	self-insured	losses	which	are	calculated	based	on	historical	claim	data,	specific	loss development	factors	and	other	information.

A	range	of	total	possible	losses	for	all	litigation	matters	cannot	be	reasonably	estimated.	Based	on	a	consideration	of	all	relevant	facts	and circumstances,	we	do	not	expect	the	ultimate	outcome	of	currently	pending	lawsuits	or	claims	against	us,	other	than	those	discussed	below,	will	have	a material	adverse	effect	on	our	financial	position,	results	of	operations	or	cash	flows,	however,	there	can	be	no	assurance	as	to	the	ultimate	outcome	of these	matters.

With	respect	to	the	litigation	matters	below,	if	there	was	an	adverse	outcome	individually	or	collectively,	there	could	be	a	material	impact	on	our business,	financial	condition	and	results	of	operations	expected	for	the	year.	These	litigation	matters	are	subject	to	inherent	uncertainties	and management's	view	of	these	matters	may	change	in	the	future.	Therefore,	there	can	be	no	assurance	as	to	the	ultimate	outcome	of	these	matters.

During	2014,	we	received	notification	from	a	customer	related	to	a	possible	equipment	failure	in	a	natural	gas	storage	system	in	Northern	Germany, which	includes	certain	of	our	products.	We	are	currently	investigating	the	cause	of	the	possible	failure	and,	if	necessary,	possible	repair	and	replacement options	for	our	products.	Similar	products	were	utilized	in	other	natural	gas	storage	systems	for	this	and	other	customers.	The	customer	initiated

arbitral	proceedings	against	us	on	June	19,	2015,	under	the	rules	of	the	German	Institute	of	Arbitration	e.V.	(DIS).	On	August	3,	2016,	the	customer amended	its	claims	and	now	alleges	damages	of	approximately	$224	million	plus	interest	at	an	annual	rate	of	prime	+	 5%.	Hearings	before	the	arbitration panel	were	held	January	16,	2017	through	January	23,	2017,	and	March	20,	2017	through	March	21,	2017.	In	addition,	on	September	21,	2015,	TRIUVA Kapitalverwaltungsgesellschaft	mbH	filed	a	lawsuit	in	the	United	States	District	Court	for	the	Southern	District	of	Texas,	Houston	Division	against	the Company	and	Baker	Hughes	Oilfield	Operations,	Inc.	alleging	that	the	plaintiff	is	the	owner	of	gas	storage	caverns	in	Etzel,	Germany	in	which	the Company	provided	certain	equipment	in	connection	with	the	development	of	the	gas	storage	caverns.	The	plaintiff	further	alleges	that	the	Company supplied	equipment	that	was	either	defectively	designed	or	failed	to	warn	of	risks	that	the	equipment	posed,	and	that	these	alleged	defects	caused damage	to	the	plaintiff's	property.	The	plaintiff	seeks	recovery	of	alleged	compensatory	and	punitive	damages	of	an	unspecified	amount,	in	addition	to reasonable	attorneys'	fees,	court	costs	and	pre-judgment	and	post-judgment	interest.	The	allegations	in	this	lawsuit	are	related	to	the	claims	made	in	the June	19,	2015	German	arbitration	referenced	above.	At	this	time,	we	are	not	able	to	predict	the	outcome	of	these	claims.

On	April	30,	2015,	a	class	and	collective	action	lawsuit	alleging	that	we	failed	to	pay	a	nationwide	class	of	workers	overtime	in	compliance	with	the Fair	Labor	Standards	Act	and	North	Dakota	law	was	filed	titled	Williams	et	al.	v.	Baker	Hughes	Oilfield	Operations,	Inc. 	in	the	U.S.	District	Court	for	the District	of	North	Dakota.		On	February	8,	2016,	the	Court	conditionally	certified	certain	subclasses	of	employees	for	collective	action	treatment.	The parties	entered	into	a	settlement	agreement	which	was	approved	by	the	Court	on	December	7,	2017.		The	amount	of	the	settlement	will	not	have	a material	impact	on	the	financial	results	reported	by	the	Company.

On	July	31,	2015,	Rapid	Completions	LLC	filed	a	lawsuit	in	federal	court	in	the	Eastern	District	of	Texas	against	Baker	Hughes	Incorporated,	Baker Hughes	Oilfield	Operations,	Inc.,	and	others	claiming	infringement	of	U.S.	Patent	Nos.	6,907,936;	7,134,505;	7,543,634;	7,861,774;	and	8,657,009.		On August	6,	2015,	Rapid	Completions	amended	its	complaint	to	allege	infringement	of	U.S.	Patent	No.	9,074,451.		On	September	17,	2015,	Rapid Completions	and	Packers	Plus	Energy	Services	Inc.	sued	Baker	Hughes	Canada	Company	in	the	Canada	Federal	Court	on	the	related	Canadian	patent 2,412,072.	On	April	1,	2016,	Rapid	Completions	removed	U.S.	Patent	No.	6,907,936	from	its	claims	in	the	lawsuit.	On	April	5,	2016,	Rapid	Completions filed	a	second	lawsuit	in	federal	court	in	the	Eastern	District	of	Texas	against	Baker	Hughes	Incorporated,	Baker	Hughes	Oilfield	Operations,	Inc.	and others	claiming	infringement	of	U.S.	Patent	No.	9,303,501.	These	patents	relate	primarily	to	certain	specific	downhole	completions	equipment.	The plaintiff	has	requested	a	permanent	injunction	against	further	alleged	infringement,	damages	in	an	unspecified	amount,	supplemental	and	enhanced damages,	and	additional	relief	such	as	attorney's	fees	and	costs.		During	August	and	September	2016,	the	United	States	Patent	and	Trademark	Office (USPTO)	agreed	to	institute	an	inter-partes	review	of	U.S.	Patent	Nos	7,861,774;	7,134,505;	7,534,634;	6,907,936;	8,657,009;	and	9,074,451.	On	August 29,	2017,	the	USPTO	issued	its	final	written	decisions	in	the	inter-partes	reviews	of	U.S.	Patent	Nos.	8,657,009	and	9,074,451	finding	that	all	claims	of those	patents	were	unpatentable.	On	August	31,	2017,	the	USPTO	issued	its	final	written	decision	in	the	inter-partes	review	of	U.S.	Patent	6,907,936	- the	patent	dropped	from	the	lawsuit	by	the	plaintiffs	-	finding	that	all	claims	of	this	patent	were	patentable.	On	October	27,	2017,	Rapid	Completions	filed its	notices	of	appeal	of	the	USPTO's	final	written	decision	in	the	inter-partes	review	of	U.S.	Patent	Nos.	8,657,009	and	9,074,451.	Trial	on	the	validity	of asserted	claims	from	Canada	patent	2,412,072,	was	completed	March	9,	2017.	On	December	7,	2017,	the	Canadian	Court	issued	its	judgment	finding the	patent	claims	asserted	from	Canada	patent	2,412,072	against	Baker	Hughes	Canada	Company	were	invalid.	On	January	5,	2018,	Rapid	Completions filed	its	Notice	of	Appeal	of	the	Canadian	Court's	judgment	of	invalidity.	At	this	time,	we	are	not	able	to	predict	the	outcome	of	these	claims.

On	May	10,	2017,	a	putative	class	action	complaint	was	filed	on	behalf	of	purported	Baker	Hughes	stockholders	in	the	U.S.	District	Court	for	the Southern	District	of	Texas	challenging	the	Transaction	Agreement	and	Plan	of	Merger	combining	Baker	Hughes	with	GE	O&G.	The	complaint	is captioned	Booth	Family	Trust	v.	Baker	Hughes	Inc.,	et	al .,	Civil	Action	No.	4:17-cv-01457	(S.D.	Tex.	2017).	The	complaint	asserted,	among	other	things, claims	under	Sections	14(a)	and	20(a)	of	the	Securities	Exchange	Act	of	1934,	as	amended	(the	Exchange	Act)	against	Baker	Hughes	and	the	members of	its	board	of	directors	and	challenged	the	adequacy	of	the	disclosures	made	in	the	combined	proxy	statement/prospectus	dated	as	of	May	9,	2017.	In addition	to	certain	unspecified	damages	and	reimbursement	of	costs,	the	plaintiff	sought	to	enjoin	the	consummation	of	the	Transactions.	On	June	21, 2017,	the	parties	reached	an	agreement	in	principle	to	settle	the	Booth	Family	Trust	litigation	in	exchange	for	the	Company	making	certain	additional disclosures.	Those	disclosures	were	contained	in	an	8-K	filed	with	the	SEC	on	June	22,

2017.	On	September	14,	2017,	the	parties	filed	a	Stipulation	of	Dismissal	with	the	Court	dismissing	all	remaining	claims	of	the	Booth	Family	Trust	with prejudice.	The	parties	agreed	to	an	award	of	attorney's	fees	in	an	amount	that	will	not	have	a	material	impact	on	the	financial	results	reported	by	the Company.

Following	consummation	of	the	Transactions,	two	purported	holders	of	shares	of	Baker	Hughes	common	stock,	representing	a	total	of 1,875,000 shares	of	common	stock	of	Baker	Hughes,	filed	petitions	in	the	Court	of	Chancery	of	the	State	of	Delaware	seeking	appraisal	for	their	shares	pursuant	to Section	262	of	the	Delaware	General	Corporation	Law.		The	action	is	captioned	as	follows:		GKC	Strategic	Value	Master	Fund,	LP	F/K/A	GKC	Appraisal Rights	Master	Fund,	LP	and	Walleye	Trading	LLC	v.	Baker	Hughes	Incorporated,	Case	No.	2017-0769.		At	this	time,	we	are	not	able	to	predict	the outcome	of	this	action.

On	February	17,	2017,	GE	Infrastructure	Sensing,	Inc.	(now	known	as	GE	Infrastructure	Sensing,	LLC)	(GEIS),	a	subsidiary	of	the	Company,	was served	with	a	lawsuit	filed	in	the	Eastern	District	of	New	York	by	a	company	named	Saniteq	LLC	claiming	compensatory	damages	totalling	$500	million plus	punitive	damages	of	an	unspecified	amount.	The	complaint	is	captioned	Saniteq	LLC	v.	GE	Infrastructure	Sensing,	Inc .,	No.	17-cv-771	(E.D.N.Y 2017).	The	complaint	generally	alleges	that	GEIS	breached	a	contract	being	negotiated	between	the	parties	and	misappropriated	unspecified	trade secrets.	At	this	time,	we	are	not	able	to	predict	the	outcome	of	these	claims.

In	January	2013,	INEOS	and	Naphtachimie	initiated	expertise	proceedings	in	Aix-en-Provence,	France	arising	out	of	a	fire	at	a	chemical	plant	owned by	INEOS	in	Lavera,	France,	which	resulted	in	a	15-day	plant	shutdown	and	destruction	of	a	steam	turbine,	which	was	part	of	a	compressor	train	owned by	Naphtachimie.	INEOS	and	Naphtachimie	claim	approximately	€195	million	in	losses	as	a	result	of	the	incident.	Two	of	the	Company's	subsidiaries (and	17	other	companies)	were	notified	to	participate	in	the	proceedings.	The	proceedings	are	ongoing,	and	at	this	time,	there	is	no	indication	that	the Company's	subsidiaries	were	involved	in	the	incident.	At	this	time,	we	are	not	able	to	predict	the	outcome	of	these	claims.

In	late	November	2017,	staff	of	the	Boston	office	of	the	SEC	notified	GE	that	they	are	conducting	an	investigation	of	GE's	revenue	recognition practices	and	internal	controls	over	financial	reporting	related	to	long-term	service	agreements.	The	scope	of	the	SEC's	request	may	include	some	BHGE contracts,	mainly	in	our	TPS	business.	We	have	provided	documents	to	GE	and	are	cooperating	with	them	in	their	response	to	the	SEC.

We	insure	against	risks	arising	from	our	business	to	the	extent	deemed	prudent	by	our	management	and	to	the	extent	insurance	is	available,	but	no assurance	can	be	given	that	the	nature	and	amount	of	that	insurance	will	be	sufficient	to	fully	indemnify	us	against	liabilities	arising	out	of	pending	or future	legal	proceedings	or	other	claims.	Most	of	our	insurance	policies	contain	deductibles	or	self-insured	retentions	in	amounts	we	deem	prudent	and	for which	we	are	responsible	for	payment.	In	determining	the	amount	of	self-insurance,	it	is	our	policy	to	self-insure	those	losses	that	are	predictable, measurable	and	recurring	in	nature,	such	as	claims	for	automobile	liability,	general	liability	and	workers	compensation.

Estimated	remediation	costs	are	accrued	using	currently	available	facts,	existing	environmental	permits,	technology	and	enacted	laws	and regulations.	Our	cost	estimates	are	developed	based	on	internal	evaluations	and	are	not	discounted.	Accruals	are	recorded	when	it	is	probable	that	we will	be	obligated	to	pay	for	environmental	site	evaluation,	remediation	or	related	activities,	and	such	costs	can	be	reasonably	estimated.	As	additional information	becomes	available,	accruals	are	adjusted	to	reflect	current	cost	estimates.	Ongoing	environmental	compliance	costs,	such	as	obtaining environmental	permits,	installation	of	pollution	control	equipment	and	waste	disposal	are	expensed	as	incurred.	Where	we	have	been	identified	as	a potentially	responsible	party	in	a	U.S.	federal	or	state	Comprehensive	Environmental	Response,	Compensation	and	Liability	Act	("Superfund")	site,	we accrue	our	share	of	the	estimated	remediation	costs	of	the	site.	This	share	is	based	on	the	ratio	of	the	estimated	volume	of	waste	we	contributed	to	the site	to	the	total	volume	of	waste	disposed	at	the	site.

In	the	normal	course	of	business	with	customers,	vendors	and	others,	we	have	entered	into	off-balance	sheet	arrangements,	such	as	surety	bonds for	performance,	letters	of	credit	and	other	bank	issued	guarantees,	which	totaled	approximately	$3.4	billion	at	December	31,	2017.	It	is	not	practicable	to estimate	the	fair	value	of	these	financial	instruments.	None	of	the	off-balance	sheet	arrangements	either	has,	or	is	likely	to	have,	a	material	effect	on	our financial	position,	results	of	operations	or	cash	flows.	We	also	had	commitments	outstanding	for	purchase	obligations	for	each	of	the	five	years	in	the period	ending	December	31,	2022	of	$962	million,	$45	million,	$42	million,	$36	million	and	$23	million,	respectively,	and	$13	million	in	the	aggregate thereafter.

# NOTE	18.	RESTRUCTURING,	IMPAIRMENT	AND	OTHER

We	recorded	restructuring,	impairment	and	other	charges	of	 $412	million,	$516	million,	and	$411	million	during	the	years	ended	December	31,	2017, 2016	and	2015,	respectively.	Details	of	these	charges	are	discussed	below.

# RESTRUCTURING	AND	IMPAIRMENT	CHARGES

In	the	current	and	prior	periods,	we	approved	various	restructuring	plans	globally,	mainly	to	consolidate	manufacturing	and	service	facilities, rationalize	product	lines	and	rooftops,	and	reduce	headcount	across	various	functions.	As	a	result,	we	recognized	a	charge	of	$385	million,	$293	million and	$314	million	for	the	years	ended	December	31,	2017,	2016	and	2015,	respectively.	These	restructuring	initiatives	will	generate	charges	post	2017, and	the	related	estimated	remaining	charges	are	approximately	$150	million.

These	charges	are	included	as	part	of	" Restructuring,	impairment	and	other"	in	the	consolidated	and	combined	statements	of	income	(loss).

The	amount	of	costs	not	included	in	the	reported	segment	results	is	as	follows:

|  | 2017 | 2016 | 2015 |
| :--- | :--- | :--- | :--- |
| Oilfield\tServices | $187 | $122 | $183 |
| Oilfield\tEquipment | 114 | 52 | 32 |
| Turbomachinery\t&amp;\tProcess\tSolutions | 21 | 58 | 54 |
| Digital\tSolutions | 34 | 34 | 26 |
| Corporate | 29 | 27 | 19 |
| Total | $385 | $293 | $314 |

These	costs	were	primarily	related	to	product	line	terminations,	plant	closures	and	related	expenses	such	as	property,	plant	and	equipment impairments,	contract	terminations	and	costs	of	assets'	and	employees'	relocation,	employee-related	termination	benefits,	and	other	incremental	costs that	were	a	direct	result	of	the	restructuring	plans.

|  | 2017 | 2016 | 2015 |
| :--- | :--- | :--- | :--- |
| Property,\tplant\t&amp;\tequipment,\tnet | $131 | $93 | $137 |
| Employee-related\ttermination\texpenses | 186 | 111 | 103 |
| Asset\trelocation\tcosts | 10 | 17 | 14 |
| EHS\tremediation\tcosts | 9 | 20 | 17 |
| Contract\ttermination\tfees | 26 | 37 | 26 |
| Other\tincremental\tcosts | 23 | 15 | 17 |
| Total | $385 | $293 | $314 |
| OTHER\tCHARGES |  |  |  |
| Other\tcharges\tincluded\tin\t"Restructuring,\timpairment\tand\tother"\tcaption\tof\tthe\tconsolidated\tand\tcombined\tstatements\tof\tincome\t(loss)\twas | Other\tcharges\tincluded\tin\t"Restructuring,\timpairment\tand\tother"\tcaption\tof\tthe\tconsolidated\tand\tcombined\tstatements\tof\tincome\t(loss)\twas | Other\tcharges\tincluded\tin\t"Restructuring,\timpairment\tand\tother"\tcaption\tof\tthe\tconsolidated\tand\tcombined\tstatements\tof\tincome\t(loss)\twas | $27 |

# OTHER	CHARGES

    Other	charges	included	in	"Restructuring,	impairment	and	other"	caption	of	the	consolidated	and	combined	statements	of	income	(loss)	was $27 million,	$223	million	and	$97	million	for	the	years	ended	December	31,	2017,	2016	and	2015,	respectively.	Other	charges	include	currency	devaluation charges	of	$12	million,	$138	million	and	$63	million	for	the	years	ended	December	31,	2017,	2016	and	2015,	respectively,	largely	driven	by	significant currency	devaluations	in	Angola	and	Nigeria.	These	markets	have	minimal	currency	derivative	liquidity	which	limits	our	ability	to	offset	these	exposures.

# NOTE	19.	SUPPLEMENTARY	INFORMATION

# All	Other	Current	Liabilities

All	other	current	liabilities	as	of	December	31,	2017	and	2016	include	approximately	$881	million	and	$318	million,	respectively,	of	employee	related liabilities.

# Product	Warranties

We	provide	for	estimated	product	warranty	expenses	when	we	sell	the	related	products.	Because	warranty	estimates	are	forecasts	that	are	based	on the	best	available	information,	primarily	historical	claims	experience,	claims	costs	may	differ	from	amounts	provided.	An	analysis	of	changes	in	the liability	for	product	warranties	are	as	follows:

| Balance	at	December	31,	2016,	and	2015,	respectively | $74 | $100 |
| :--- | :--- | :--- |
| Provisions | 37 | 29 |
| Expenditures | (44) | (49) |
| Other\t(1) | 97 | (6) |
| Balance\tat\tDecember\t31,\t2017,\tand\t2016,\trespectively | $164 | $74 |

(1) Includes	an	increase	of	$93	million	in	the	year	ended	December	31,	2017	as	a	result	of	the	Baker	Hughes acquisition.

# NOTE	20.	QUARTERLY	DATA	(UNAUDITED)

| (In	millions,	except	per	share	amounts) | First<br>Quarter | Second<br>Quarter | Third<br>Quarter | Fourth<br>Quarter | Total<br>Year |
| :--- | :--- | :--- | :--- | :--- | :--- |
| 2017 |  |  |  |  |  |
| Revenue | $3,111 | $3,010 | $5,375 | $5,763 | $17,259 |
| Gross\tprofit\t(1) | 775 | 542 | 1,020 | 875 | 3,213 |
| Restructuring,\timpairment\tand\tother\t (2) | 42 | 59 | 191 | 119 | 412 |
| Merger\tand\trelated\tcosts | 66 | 85 | 159 | 63 | 373 |
| Net\tincome\t(loss)\tattributable\tto\tBaker\tHughes,\ta\tGE\tcompany | — | — | (104) | 30 | (73) |
| Basic\tearnings\t(loss)\tper\tClass\tA\tcommon\tshare |  |  | (0.24) | 0.07 | (0.17) |
| Diluted\tearnings\t(loss)\tper\tClass\tA\tcommon\tshare |  |  | (0.24) | 0.07 | (0.17) |
| Cash\tdividend\tper\tClass\tA\tcommon\tshare |  |  | 0.17 | 0.18 | 0.35 |
| Common\tstock\tmarket\tprices: |  |  |  |  |  |
| High |  |  | 37.91 | 36.86 |  |
| Low |  |  | 32.54 | 29.73 |  |
| 2016 |  |  |  |  |  |
| Revenue | $3,407 | $3,322 | $3,024 | $3,516 | $13,269 |
| Gross\tprofit\t(1) | 798 | 785 | 730 | 833 | 3,146 |
| Restructuring,\timpairment\tand\tother\t (2) | 147 | 228 | 77 | 64 | 516 |
| Merger\tand\trelated\tcosts | 5 | 3 | 2 | 23 | 33 |
| Net\tincome\t(loss)\tattributable\tto\tBaker\tHughes,\ta\tGE\tcompany | — | — | — | — | — |

(1) Represents	revenue	less	cost	of	sales	and	cost	of services.

(2) Restructuring,	impairment	and	other	costs	associated	with	asset	impairments,	workforce	reductions,	facility	closures	and	contract	terminations	recorded during	2017	and	2016.	See	"Note	18.	Restructuring,	Impairment	and	Other"	for	further	discussion.

# ITEM	9.	CHANGES	IN	AND	DISAGREEMENTS	WITH	ACCOUNTANTS	ON	ACCOUNTING	AND	FINANCIAL	DISCLOSURE

# 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.

# ITEM	9A.	CONTROLS	AND	PROCEDURES

# Evaluation	of	disclosure	controls	and	procedures

Our	management,	with	the	participation	of	our	Chief	Executive	Officer	and	Chief	Financial	Officer,	has	evaluated	the	effectiveness	of	the	design	and operation	of	our	disclosure	controls	and	procedures	(as	defined	in	Rule	15d-15(e)	under	the	Exchange	Act)	as	of	the	end	of	the	period	covered	by	this report.	Based	upon	that	evaluation,	the	Chief	Executive	Officer	and	Chief	Financial	Officer	have	concluded	that,	as	of	December	31,	2017,	our disclosure	controls	and	procedures	(as	defined	in	Rule	15d-15(e)	of	the	Exchange	Act)	were	effective	at	a	reasonable	assurance	level.

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.

# ITEM	9B.	OTHER	INFORMATION

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.

# PART	III

# ITEM	10.	DIRECTORS,	EXECUTIVE	OFFICERS	AND	CORPORATE	GOVERNANCE

Information	regarding	our	Code	of	Conduct,	 The	Spirit	and	The	Letter,	and	Code	of	Ethical	Conduct	Certificates	for	our	principal	executive	officer, principal	financial	officer	and	principal	accounting	officer	are	described	in	Item	1.	Business	of	this	Annual	Report.	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	2018	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,	2017	("Proxy	Statement"),	which	sections	are	incorporated	herein	by	reference.	For	information regarding	our	executive	officers,	see	"Item	1.	Business	-	Executive	Officers	of	Baker	Hughes"	in	this	annual	report	on	Form	10-K.	Additional	information regarding	compliance	by	directors	and	executive	officers	with	Section	16(a)	of	the	Exchange	Act	is	set	forth	under	the	section	entitled	"Section	16(a) Beneficial	Ownership	Reporting	Compliance"	in	our	Proxy	Statement,	which	section	is	incorporated	herein	by	reference.

# ITEM	11.	EXECUTIVE	COMPENSATION

Information	for	this	item	is	set	forth	in	the	following	sections	of	our	Proxy	Statement,	which	sections	are	incorporated	herein	by	reference: "Compensation	Discussion	and	Analysis,"	"Director	Compensation,"	"Compensation	Committee	Interlocks	and	Insider	Participation"	and	"Compensation Committee	Report."

# ITEM	12.	SECURITY	OWNERSHIP	OF	CERTAIN	BENEFICIAL	OWNERS	AND	MANAGEMENT	AND	RELATED	STOCKHOLDER	MATTERS

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	Officers")	in	our	Proxy	Statement,	which	sections	are incorporated	herein	by	reference.

We	permit	our	employees,	officers	and	directors	to	enter	into	written	trading	plans	complying	with	Rule	10b5-1	under	the	Exchange	Act.	Rule	10b5-1 provides	criteria	under	which	such	an	individual	may	establish	a	prearranged	plan	to	buy	or	sell	a	specified	number	of	shares	of	a	company's	stock	over	a set	period	of	time.	Any	such	plan	must	be	entered	into	in	good	faith	at	a	time	when	the	individual	is	not	in	possession	of	material,	nonpublic	information.	If an	individual	establishes	a	plan	satisfying	the	requirements	of	Rule	10b5-1,	such	individual's	subsequent	receipt	of	material,	nonpublic	information	will	not prevent	transactions	under	the	plan	from	being	executed.	Certain	of	our	officers	have	advised	us	that	they	have	and	may	enter	into	stock	sales	plans	for the	sale	of	shares	of	our	Class	A	common	stock	which	are	intended	to	comply	with	the	requirements	of	Rule	10b5-1	of	the	Exchange	Act.	In	addition,	the Company	has	and	may	in	the	future	enter	into	repurchases	of	our	Class	A	common	stock	under	a	plan	that	complies	with	Rule	10b5-1	or	Rule	10b-18	of the	Exchange	Act.

# Equity	Compensation	Plan	Information

The	information	in	the	following	table	is	presented	as	of	December	31,	2017	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).

| Equity	Compensation	Plan<br>Category | Number	of<br>Securities	to	be<br>Issued	Upon<br>Exercise	of<br>Outstanding<br>Options,	Warrants<br>and	Rights | Weighted	Average<br>Exercise	Price	of<br>Outstanding<br>Options,	Warrants<br>and	Rights | Number	of	Securities<br>Remaining	Available<br>for	Future	Issuance<br>Under	Equity<br>Compensation	Plans<br>(excluding	securities<br>reflected	in	the	first<br>column) |
| :--- | :--- | :--- | :--- |
| Stockholder-approved\tplans | 1.6 | $36.61 | 53.7 |
| Nonstockholder-approved\tplans | — | — | — |
| Total | 1.6 | $36.61 | 53.7 |

# ITEM	13.	CERTAIN	RELATIONSHIPS	AND	RELATED	TRANSACTIONS,	AND	DIRECTOR	INDEPENDENCE

Information	for	this	item	is	set	forth	in	the	sections	entitled	"Corporate	Governance-Director	Independence"	and	"Certain	Relationships	and	Related Party	Transactions"	in	our	Proxy	Statement,	which	sections	are	incorporated	herein	by	reference.

# ITEM	14.	PRINCIPAL	ACCOUNTING	FEES	AND	SERVICES

Information	concerning	principal	accountant	fees	and	services	is	set	forth	in	the	section	entitled	"Fees	Paid	to	Deloitte	&	Touche	LLP,	KPMG	LLP	and KPMG	S.p.A."	in	our	Proxy	Statement,	which	section	is	incorporated	herein	by	reference.

# ITEM	15.	EXHIBITS

(a)	List	of	Documents	filed	as	part	of	this	annual	report.

# (1)	Financial	Statements

All	financial	statements	of	the	Company	as	set	forth	under	Item	8	of	this	annual	report	on	Form	10-K.

# (2)	Exhibits

Each	exhibit	identified	below	is	filed	as	a	part	of	this	annual	report.	Exhibits	designated	with	an	"*"	are	filed	as	an	exhibit	to	this	annual	report	on Form	10-K	and	exhibits	designated	with	an	"**"	are	furnished	as	an	exhibit	to	this	annual	report	on	Form	10-K.	Exhibits	designated	with	a	"+"	are identified	as	management	contracts	or	compensatory	plans	or	arrangements.	Exhibits	previously	filed	as	indicated	below	are	incorporated	by	reference.

4.6 First	Supplemental	Indenture	to	the	Indenture	dated	as	of	May	15,	1994,	among	Baker	Hughes,	a	GE	company,	LLC,	Baker	Hughes	Co- Obligor,	Inc.	and	The	Bank	of	New	York	Mellon	Trust	Company,	N.A.,	as	trustee	(incorporated	by	reference	to	Exhibit	4.4	to	Baker Hughes,	a	GE	company's	Current	Report	on	Form	8-K12B	filed	on	July	3,	2017).

10.16+ Form	of	Indemnification	Agreement	(incorporated	by	reference	to	Exhibit	10.15	to	the	Current	Report	of	Baker	Hughes,	a	GE	company	on Form	8-K12B	dated	July	3,	2017).

10.17+ Baker	Hughes,	a	GE	company	2017	Long-Term	Incentive	Plan	(incorporated	by	reference	to	Exhibit	10.16	to	the	Current	Report	of	Baker Hughes,	a	GE	company	on	Form	8-K12B	dated	July	3,	2017).

10.18+ Baker	Hughes,	a	GE	company	Executive	Officer	Short-Term	Incentive	Plan	(incorporated	by	reference	to	Exhibit	10.22	to	the	Current Report	of	Baker	Hughes,	a	GE	company	on	Form	8-K12B	dated	July	3,	2017).

10.19+ Baker	Hughes,	a	GE	company	Severance	Benefits	Plan	(incorporated	by	reference	to	Exhibit	10.23	to	the	Current	Report	of	Baker Hughes,	a	GE	company	on	Form	8-K12B	dated	July	3,	2017).

10.20+ Form	of	Stock	Option	Award	Agreement	(incorporated	by	reference	to	Exhibit	10.17	to	the	Current	Report	of	Baker	Hughes,	a	GE company	on	Form	8-K12B	dated	July	3,	2017).

10.21+* Form	of	Stock	Option	Award	Agreement	dated	January	2018.

10.22+ Form	of	Senior	Executive	Stock	Option	Award	Agreement	(incorporated	by	reference	to	Exhibit	10.18	to	the	Current	Report	of	Baker Hughes,	a	GE	company	on	Form	8-K12B	dated	July	3,	2017).

10.23+ Form	of	Restricted	Stock	Unit	Award	Agreement	(incorporated	by	reference	to	Exhibit	10.19	to	the	Current	Report	of	Baker	Hughes,	a	GE company	on	Form	8-K12B	dated	July	3,	2017).

10.24+* Form	of	Restricted	Stock	Unit	Award	Agreement	(three	year	cliff	vest)	dated	January	2018.

10.25+* Form	of	Restricted	Stock	Unit	Award	Agreement	(three	year	ratable	vest)	dated	January	2018.

10.26+ Form	of	Senior	Executive	Restricted	Stock	Unit	Award	Agreement	(incorporated	by	reference	to	Exhibit	10.20	to	the	Current	Report	of Baker	Hughes,	a	GE	company	on	Form	8-K12B	dated	July	3,	2017).

10.27+* Form	of	Senior	Executive	Performance	Share	Award	Agreement	(Performance	Metric	of	Return	on	Invested	Capital)	dated	January	2018.

10.28+* Form	of	Senior	Executive	Performance	Share	Award	Agreement	(Performance	Metric	of	Total	Shareholder	Return)	dated	January	2018.

10.29+ Form	of	Director	Restricted	Stock	Unit	Award	Agreement	(incorporated	by	reference	to	Exhibit	10.21	to	the	Current	Report	of	Baker Hughes,	a	GE	company	on	Form	8-K12B	dated	July	3,	2017).

10.30+* Form	of	Director	Restricted	Stock	Unit	Award	Agreement	dated	January	2018.

10.31+ Baker	Hughes,	a	GE	company	Non-Employee	Director	Deferral	Plan	(filed	as	Exhibit	10.1	to	the	Current	Report	of	Baker	Hughes,	a	GE company	on	Form	8-K	filed	on	August	4,	2017).

10.32+ Offer	Letter	between	Baker	Hughes,	a	GE	company	and	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	August	4,	2017).

10.33+* Letter	Agreement	between	Baker	Hughes,	a	GE	company	and	Belgacem	Chariag,	dated	as	of	January	2,	2018.

10.34+ Form	of	Amended	and	Restated	Change	in	Control	Agreement	between	Baker	Hughes	Incorporated	and	each	of	the	executive	officers effective	as	of	January	1,	2009	(incorporated	by	reference	to	Exhibit	10.2	to	the	Current	Report	of	Baker	Hughes	Incorporated	on	Form	8- K	filed	on	December	19,	2008).

10.35+ Amendment	and	Restatement	of	the	Baker	Hughes	Incorporated	Change	in	Control	Severance	Plan	effective	as	of	January	1,	2009 (incorporated	by	reference	to	Exhibit	10.3	to	the	Current	Report	of	Baker	Hughes	Incorporated	on	Form	8-K	filed	on	December	19,	2008).

10.36+ Form	of	Change	in	Control	Agreement	between	Baker	Hughes	Incorporated	and	certain	of	the	executive	officers	effective	as	of	July	16, 2012	(incorporated	by	reference	to	Exhibit	10.1	to	the	Quarterly	Report	of	Baker	Hughes	Incorporated	on	Form	10-Q	for	the	quarter ended	June	30,	2012).

10.37+ Form	of	Executive	Loyalty,	Confidentiality,	Non-Solicitation,	and	Non-Competition	Agreement	between	Baker	Hughes	Incorporated	and certain	of	the	executive	officers	(incorporated	by	reference	to	Exhibit	10.3	to	the	Annual	Report	of	Baker	Hughes	Incorporated	on	Form 10-K	for	the	year	ended	December	31,	2011).

10.38+ Baker	Hughes	Incorporated	Director	Retirement	Policy	for	Certain	Former	Members	of	the	Board	of	Directors	of	Baker	Hughes Incorporated	(incorporated	by	reference	to	Exhibit	10.10	to	the	Annual	Report	of	Baker	Hughes	Incorporated	on	Form	10-K	for	the	year ended	December	31,	2003).

10.39+ Amendment	and	Restatement	of	the	Baker	Hughes	Incorporated	Executive	Severance	Plan	effective	as	of	May	24,	2016	(incorporated by	reference	to	Exhibit	10.1	to	the	Current	Report	of	Baker	Hughes	Incorporated	on	Form	8-K	filed	on	May	25,	2016).

10.40+ Baker	Hughes	Incorporated	Supplemental	Retirement	Plan,	as	amended	and	restated	effective	as	of	January	1,	2012	(incorporated	by reference	to	Exhibit	10.1	to	the	Current	Report	of	Baker	Hughes	Incorporated	on	Form	8-K	filed	on	December	20,	2011).

10.41+ Amended	and	Restated	Baker	Hughes	Incorporated	2002	Employee	Long-Term	Incentive	Plan	effective	April	24,	2014	(incorporated	by reference	to	Exhibit	10.2	to	the	Current	Report	of	Baker	Hughes	Incorporated	on	Form	8-K	filed	on	April	29,	2014).

10.42+ Amended	and	Restated	Baker	Hughes	Incorporated	2002	Director	&	Officer	Long-Term	Incentive	Plan	effective	April	24,	2014 (incorporated	by	reference	to	Exhibit	10.1	to	the	Current	Report	of	Baker	Hughes	Incorporated	on	Form	8-K	filed	on	April	29,	2014).

10.43+ Form	of	Baker	Hughes	Incorporated	Nonqualified	Stock	Option	Agreement	with	Terms	and	Conditions	for	officers	(incorporated	by reference	to	Exhibit	10.30	to	the	Annual	Report	of	Baker	Hughes	Incorporated	on	Form	10-K	for	the	year	ended	December	31,	2009).

10.44+ Form	of	Baker	Hughes	Incorporated	Nonqualified	Stock	Option	Award	Agreement	and	Terms	and	Conditions	for	officers	(incorporated	by reference	to	Exhibit	10.70	to	the	Annual	Report	of	Baker	Hughes	Incorporated	on	Form	10-K	for	the	year	ended	December	31,	2011).

10.45+ Form	of	Baker	Hughes	Incorporated	Nonqualified	Stock	Option	Award	Agreement	and	Terms	and	Conditions	for	officers	(incorporated	by reference	to	Exhibit	10.6	to	the	Current	Report	of	Baker	Hughes	Incorporated	on	Form	8-K	filed	on	January	28,	2014).

10.46+ Form	of	Baker	Hughes	Incorporated	Nonqualified	Stock	Option	Award	Agreement	and	Terms	and	Conditions	for	officers	(incorporated	by reference	to	Exhibit	10.6	to	the	Quarterly	Report	of	Baker	Hughes	Incorporated	on	Form	10-Q	for	the	quarter	ended	June	30,	2014).

10.47+ Form	of	Baker	Hughes	Incorporated	Incentive	Stock	Option	Award	Agreement	and	Terms	and	Conditions	for	officers	(incorporated	by reference	to	Exhibit	10.33	to	the	Annual	Report	of	Baker	Hughes	Incorporated	on	Form	10-K	for	the	year	ended	December	31,	2009).

10.48+ Form	of	Baker	Hughes	Incorporated	Incentive	Stock	Option	Award	Agreement	and	Terms	and	Conditions	for	officers	(incorporated	by reference	to	Exhibit	10.71	to	the	Annual	Report	of	Baker	Hughes	Incorporated	on	Form	10-K	for	the	year	ended	December	31,	2011).

10.49+ Form	of	Baker	Hughes	Incorporated	Incentive	Stock	Option	Award	Agreement	and	Terms	and	Conditions	for	officers	(incorporated	by reference	to	Exhibit	10.7	to	the	Current	Report	of	Baker	Hughes	Incorporated	on	Form	8-K	filed	on	January	28,	2014).

10.50+ Form	of	Baker	Hughes	Incorporated	Incentive	Stock	Option	Award	Agreement	and	Terms	and	Conditions	for	officers	(incorporated	by reference	to	Exhibit	10.7	to	the	Quarterly	Report	of	Baker	Hughes	Incorporated	on	Form	10-Q	for	the	quarter	ended	June	30,	2014).

10.51+ Form	of	Baker	Hughes	Incorporated	Restricted	Stock	Unit	Award	Agreement	and	Terms	and	Conditions	for	officers	with	a	three-year graded	vesting	(incorporated	by	reference	to	Exhibit	10.2	to	the	Current	Report	of	Baker	Hughes	Incorporated	on	Form	8-K	filed	on January	31,	2017).

10.52+ Form	of	Baker	Hughes	Incorporated	Restricted	Stock	Unit	Award	Agreement	and	Terms	and	Conditions	for	officers	with	a	three-year	cliff vesting	(incorporated	by	reference	to	Exhibit	10.1	to	the	Current	Report	of	Baker	Hughes	Incorporated	on	Form	8-K	filed	on	January	31, 2017).

10.53+ Form	of	Baker	Hughes	Incorporated	Stock	Option	Award	Agreement,	including	Terms	and	Conditions	for	directors	(incorporated	by reference	to	Exhibit	10.41	to	the	Annual	Report	of	Baker	Hughes	Incorporated	on	Form	10-K	for	the	year	ended	December	31,	2005).

10.54+ Form	of	Baker	Hughes	Incorporated	Performance	Based	Restricted	Stock	Unit	Award	Agreement	and	Terms	and	Conditions	for	officers with	a	three-year	cliff	vesting	(incorporated	by	reference	to	Exhibit	10.3	to	the	Current	Report	of	Baker	Hughes	Incorporated	on	Form	8-K filed	on	January	31,	2017).

10.55+ Letter	Agreement	between	Baker	Hughes	Incorporated	and	Kimberly	A.	Ross	dated	December	30,	2016	(incorporated	by	reference	to Exhibit	10.7	to	the	Annual	Report	of	Baker	Hughes	Incorporated	on	Form	10-K	for	the	year	ended	December	31,	2016).

10.56+ Letter	Agreement	between	Baker	Hughes	Incorporated	and	Alan	R.	Crain	dated	July	29,	2016	(incorporated	by	reference	to	Exhibit	10.1 to	the	Quarterly	Report	of	Baker	Hughes	Incorporated	on	Form	10-Q	for	the	quarter	ended	September	30,	2016).

31.1** Certification	of	Lorenzo	Simonelli,	President	and	Chief	Executive	Officer,	furnished	pursuant	to	Rule	13a-14(a)	of	the	Securities Exchange	Act	of	1934,	as	amended.

31.2** Certification	of	Brian	Worrell,	Chief	Financial	Officer,	furnished	pursuant	to	Rule	13a-14(a)	of	the	Securities	Exchange	Act	of	1934,	as amended.

32** Certification	of	Lorenzo	Simonelli,	President	and	Chief	Executive	Officer,	and	Brian	Worrell,	Chief	Financial	Officer,	furnished	pursuant	to Rule	13a-14(b)	of	the	Securities	Exchange	Act	of	1934,	as	amended.

# 101.INS* XBRL	Instance	Document

# 101.SCH* XBRL	Schema	Document

101.CAL* XBRL	Calculation	Linkbase	Document

101.LAB* XBRL	Label	Linkbase	Document

101.PRE* XBRL	Presentation	Linkbase	Document

101.DEF* XBRL	Definition	Linkbase	Document

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	as	amended,	the	registrant	has	duly	caused	this	report	to be	signed	on	its	behalf	by	the	undersigned,	thereunto	duly	authorized.

/s/	LORENZO	SIMONELLI

Lorenzo	Simonelli

Chairman,	President	and	Chief	Executive	Officer

KNOWN	ALL	PERSONS	BY	THESE	PRESENTS,	that	each	person	whose	signature	appears	below	constitutes	and	appoints	Lorenzo	Simonelli	and Brian	Worrell	and	William	D.	Marsh,	each	of	whom	may	act	without	joinder	of	the	other,	as	their	true	and	lawful	attorneys-in-fact	and	agents,	each	with	full power	of	substitution	and	resubstitution,	for	such	person	and	in	his	or	her	name,	place	and	stead,	in	any	and	all	capacities,	to	sign	any	and	all amendments	to	this	Annual	Report	on	Form	10-K,	and	to	file	the	same,	with	all	exhibits	thereto	and	other	documents	in	connection	therewith,	with	the Securities	and	Exchange	Commission,	granting	unto	said	attorneys-in-fact	and	agents	full	power	and	authority	to	do	and	perform	each	and	every	act	and thing	requisite	and	necessary	to	be	done	in	and	about	the	premises,	as	fully	to	all	intents	and	purposes	as	he	might	or	could	do	in	person,	hereby	ratifying and	confirming	all	that	said	attorneys-in-fact	and	agents,	or	their	substitutes,	may	lawfully	do	or	cause	to	be	done	by	virtue	hereof.

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	as	amended,	this	report	has	been	signed	below	by	the	following	persons	on behalf	of	the	registrant	and	in	the	capacities	indicated	on	this	23rd	day	of	February	2018.



Question: what is the cash from operating activities in 2017 as a percentage of cash and equivalents in 2017?
Answer: 156%