Company: BKR
Filing Date: 2025-04-23
Form Type: 10-Q
Source: 0001701605-25-000075
Chunk: 33

Company: Baker Hughes Co
Filing Date: 2025-04-23
Form: 10-Q
Item: Part I, Item 1
Chunk 33
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 The total notional amount remaining on the issued CDS was $556 million and $412 million as of March 31, 2025 and December 31, 2024, respectively, which will reduce each month through September 2026 as the customer repays the borrowings. As of March 31, 2025, the fair value of these derivative liabilities is not material.FORMS OF HEDGINGCash Flow HedgesThe Company uses cash flow hedging primarily to mitigate the effects of foreign exchange rate changes on purchase and sale contracts. Accordingly, the vast majority of derivative activity in this category consists of currency exchange contracts. In addition, the Company is exposed to interest rate risk fluctuations in connection with long-term debt that it issues from time to time to fund its operations. Changes in the fair value of cash flow hedges are recorded in a separate component of equity (referred to as "Accumulated Other Comprehensive Income" or "AOCI") and are recorded in earnings in the period in which the hedged transaction occurs. See "Note 10. Equity" for further information on activity in AOCI for cash flow hedges. As of March 31, 2025 and December 31, 2024, the maximum term of cash flow hedges that hedge forecasted transactions was approximately one year.Fair Value HedgesAll of the Company's long-term debt is comprised of fixed rate instruments. The Company is subject to interest rate risk on its debt portfolio and may use interest rate swaps to manage the economic effect of fixed rate obligations associated with certain debt. Under these arrangements, the Company agrees to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount.As of March 31, 2025 and December 31, 2024, the Company had interest rate swaps with a notional amount of $500 million that converted a portion of its $1,350 million aggregate principal amount of 3.337% fixed rate Senior Notes due 2027 into a floating rate instrument with an interest rate based on a Secured Overnight Financing Rate 

Baker Hughes Company 2025 First Quarter Form 10-Q | 14

Baker Hughes CompanyNotes to Unaudited Condensed Consolidated Financial Statements

index. The Company concluded that the interest rate swap met the criteria necessary to qualify for hedge accounting, and as such, the changes in this fair value hedge are recorded as gains or losses in interest expense and are equally offset by the