Baker Hughes, a GE Company Investor Update December 8, 2016 |
Agenda and Speakers New Baker Hughes BHI Deal Rationale Creating Customer Value + Productivity Leadership -Commercial Innovation -Digital Transformation -Technology Leadership -Optimizing Operations Integration Update Summary Q&A Lorenzo Simonelli Martin Craighead Maria Borras/Derek Mathieson/Rod Christie Matthias Heilmann Art Soucy/Kishore Sundararajan Jody Markopoulos UwemUkpong Lorenzo Simonelli |
Baker Hughes, a GE Company Lorenzo Simonelli |
What We Like About the Deal Fullstreamtechnology provider ... industry-unique portfolio Combining strengths ... technology, services, global capability 2x scale ... better ability to influence customer outcomes GE Digital capability ... significant impact on oilfield services productivity Blended leadership team ... deep industry expertise Significant synergies + NewCobetter positioned to navigate cycles |
Transaction Overview ... the "new" Baker Hughes http://blogs.bakerhughes.com/reservoir/files/2011/03/ Baker_Hughes_Logo.png Shareholders GE Oil & Gas + $7.4B cash Newco, Inc. (NYSE listed) http://blogs.bakerhughes.com/reservoir/files/2011/03/ Baker_Hughes_Logo.png $17.50/sh dividend 100% $7.4B cash (operating partnership) 62.5% 37.5% oMerge GE Oil & Gas with Baker Hughes ... GE owns 62.5%, new Baker Hughes owns 37.5% through partnership structure oPublicly traded company with separate investor base; robust minority protections oOwnership interest & voting aligned oGE to contribute $7.4B to fund cash dividend, Baker Hughes distributes $17.50 per share dividend to shareholders oBaker Hughes shareholders receive dividend & 37.5% equity of stronger business oBlended leadership team o9 member Board ... 5 appointed by GE, 4 by Baker Hughes, including M. Craighead |
Update Since 10/31 Transaction Announcement Broad support for transaction ... strong industrial logic Customers see significant value ... Process, Technology, Digital Provided supplemental financial information on GE O&G Hosted GE O&G specific investor event at Minds + Machines conference Integration teams kicked off and executing ... cost + revenue synergies Regulatory process underway |
Baker Hughes, a GE Company ~$34B* revenue~70,000 employees>120 countries Find and produce hydrocarbons Transport hydrocarbons Process & market products Drilling & Evaluation Completion & Production LNG & Pipeline Solutions Refinery & Petrochemical Solutions * 2020F |
Creating the Productivity Leader in the O&G Industry Fullstreamportfolio Productivity drivers Better outcomes Commercial Innovation Digital Transformation Technology Leadership Operations Optimization Cost per Barrel ROI Faster cycle times Drilling & Evaluation Completion & Production LNG & Pipeline Solutions Refinery & Petrochemical Solutions Digital Solutions = + |
Deal Rationale Martin Craighead |
Volatility is the New Normal Volatility remains despite improved prospects for a recovery Operators need stability, resilience, and predictability Industry unsuccessful in achieving return-on-invested-capital Recovery rates and well efficiencies are sub-optimal 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 $0 $50 $100 $150 1980 1985 1990 1995 2000 2005 2010 2015 $/barrel Global Rig Count WTI Spot Price (left) |
Customers Require More Productivity Step change in productivity new wave of innovation unit cost of oil and gas production must be improved Differentiation required + partners with broad offering '16 YTD '15 '14 '13 '08 (1)% 5% 6% 14% ROCE -SelectedMajors& Independents (1)% $99 $108 $100 $54 $45 Average Brent $/bbl .... .... 0.0 20.0 40.0 60.0 80.0 100.0 120.0 0 25 50 75 100 $/bbl 2020 MBOE/D ~$25/boe reduction in cost curve '14 vs.'16 Prices likely to recover with activity pick-up ... structural reductions may persist ~90% of 2020 production breakeven @ ~$60/boe in 2016 vs ~$85/boe in 2014 $~25/boe reduction Sources: Capital IQ, Rystad '14 '16 |
Creating Customer & Investor Value Productivity leader for the industry -Fullstreamportfolio -Broad digital capability -Extraordinary range of technology 2x scale, complementary capabilities, more diversified BHI shareholders participate in substantial value creation through synergies Positioned to weather short-term volatility and participate in industry upcycle |
Commercial Innovation Maria Borras, Derek Mathieson, Rod Christie |
Adding Value for our Customers Increasing cross penetration in countries/customers Relationships Sales channels Cross penetration 80 .120+ COUNTRIES REACHED Technology, Supply Chain + Digital Intelligent products Reduced complexity Modularity Asset level solutions 0.1 FULLSTREAM CAPABILITY PROVIDER Performance based commercial models Bonus/Malus tied to KPI/targets Availability guarantee Advanced commercial models ~40% AVERAGE PROJECT CAPEX ONSHORE SCOPE FOR NEWCO Integrated, outcome based solutions Risk/Reward management Bonus/Malus tied to production Financing CAPEX .OPEX +43% AVERAGE PROJECT SIZE INCREASE OVER NEXT 5 YEARS Sources: Company information, American Energy Partners, GlobalData |
Global Coverage ... Market Channel Improvement 80 .120+ countries Financing Company to Country Channel stability Africa subcontinental -onshore -Remote areas -Limited infrastructure ... investment beyond E&P -Leverage local presence West Africa -offshore -Stranded gas ... monetization during field development -Ultra-deepwaterwells -Connection to onshore power plants Brazil -offshore -Complex, multi-prospect discovery -Early production system during reservoir evaluation -Concept hinges on FPSO NOC Independentor Integrated Majority in locations with less developed infrastructure/supply chains 2018 2019 2020 >2021 12 29 94 Total Sources: Company information, GlobalData |
North America Unconventionals... Key to Supply NAM unconventional is critical short-cycle supplier By 2020, unconventional will account for ~70% of total US Production Complexity of well increasing US + Canada ~80-90% of unconventional production in 2020 NAM Capex spend .~80% between '16-'18 Permian growth ~12% p.a. Incremental Production & annual spend ... '16-'20 Sources: IHS, Rystad Production (Mboe/d) Spend ($ in billions) NAM Unconventionals ROW Onshore Selected shale plays ... annual spend until 2020 ($ in billions) Barnett $2 13 22 Permian Eagleford Woodford Marcellus Niobrara Utica Bakken 6 Haynesville 3 5 $39 11 9 Incremental annual spend 2016 8 1 $99 $67 |
Unlocking Value in Unconventional + + Cost / bblreductions '14 vs. 16 ..Integrated ecosystem ..Digital productivity programs ... . NPT ..Drilling automation: Predictive + Predix Drilling Completion & Production oReservoir modeling expertise oIndustry leading RSS (AutoTrakCurve) oBHA optimization capability oGE design + manufacturing ... .RSS reliability & performance oAdvanced wellbore placement ... MEMS gyros & solid state sensors oPredictive analytics oBest in class completion equipment oLeading production chemicals franchise oLeading ESP offering oBrilliant Factory ... .product quality and .lead times oDigital integration ... design optimiziation oSensors + connectivity + Predix Productivity for customers ..Advanced AL Systems + productivity tools ..Digital thread: reservoir to well construction to production ..Predictive analytics ... production optimization Sources: IHS, Rystad ~$80 ~$48 '14 '16 Service cost High-grading Learnings Operations ~70% of cost reductions have been cyclical, not structural ~70%of cost reductions have been cyclical, not structural |
Enabling Deepwater Productivity Technology, Digital and Commercial solutions Example: W. Africa Offshore Project Spend 3% 25% 21% 9% 4% 11% 27% Internal Transportation, Logistics Engineering Topsides & Processing Well Service Subsea & SURF Seismic + Baker Hughes 1-2-1 strategy redefining drilling productivity and reliability in deepwater 5D modelling trees, BOP reliability and evolving services models improving project economics Digital twin and OPEX commercial models for rotating machinery, and processing equipment Well Construction Midstream, LNG + + + Financing LNG plant & liquefaction equipment, processing equipment, pipeline services Innovative business models, risk sharing Subsea Production Sources: Rystad, McKinsey |
Unlock Deepwater Opportunities with Better Productivity oFocus on major projects across all deepwaterbasins o11B BOE are marginal at +/-$40/boe... ~1.9MMbbl/day peak production potential o~10% improvement in lifting cost from fullstreamproductivity program could unlock ~$200Baddressable deepwateropportunity Sources: IHS, Baker Hughes analysis |
Next Chapter in Capex & OpexProductivity ..Reliability centered maintenance ..Digital monitoring and diagnostics ..Incentives aligned with customers ..Lifecycle project view = .information connection ..Technology & phase optimization ...standardization = .ability to redeployassets |
Productivity from Contractual Service Agreements (CSA) Contractual Service Agreements GE Oil & Gas Evolution Today Aircraft engines Gas turbines Locomotives Diagnostic imaging Gas turbines & compressors Blowout preventers 1995 http://www.geaviation.com/company/img/genx.jpg https://cdn2.geready.com/sites/default/files/ evolution_series_locomotive_0.jpg http://www3.gehealthcare.com/~/media/images/product/ product-categories/nuclear-medicine/cardiac%20scanners/ventri/ ventri-nm_table_options_premium_table.jpg http://www.compressortech2.com/images/cache/cache_b/cache_5/ cache_0/GELM6000-PF-resized-dbb1405b.jpeg?ver=1469206008& aspectratio=1.5317220543807 https://www.geoilandgas.com/sites/geog.dev.local/files/styles/ product_hero/public/Ram_BOP_Hero.jpg?itok=c6UrEo86 20+ years track record ..>6,800 units ..1B+ hours in operation Data rich ..Uptime ..Output ..Align with revenue model Customer commitment ..Less cyclical ..Ability to drive productivity GE benefit Potential use cases ..Drilling ..Production outcomes ..From transaction to campaign-based |
Digital Transformation Matthias Heilmann |
Digital Essential to Unlock Productivity Productivity oDigital Thread oBrilliant manufacturing Apps oService transformation oDigital enabled CSAs Platforms oPredixIndustrial Internet Operating System oDigital twin oServices effectiveness & efficiencies oDesign & Innovation acceleration oBetter outcomes for customers oOptimize GE/BHI equipment oFullstreamdata analytics oLeapfrog digital industrial transformation oIndustrial strength, cyber security, scale oPredixProcess + Production Optimization New BHI for New BHI New BHI for Customers New BHI for Industry |
Leapfrog Digital Transformation ... GE's Learnings |
PredixPowered Oil & Gas Offerings Architecture Apps EQUIPMENT DATA Asset Performance Management Artificial Intelligence + Machine Learning Production Optimization Digital Twin Sensors / Edge Cloud / Security Design & Build Collaboration Ecosystem PRODUCTION DATA LOGGING & EVALUATION DATA DRILLING DATA WELL COMPLETION DATA RESERVOIR DATA Oil&GasExtensions Oil&GasExtensions |
Asset Performance Management for Upstream 1)Excursion & anomaly management 2)Equipment monitoring & analysis 3)Process Surveillance 4)Knowledge repository ... best practice sharing oSiloed business operations oSafety concerns oReactive to process upsets PredixAPM + O&G extensions providing fleet-wide insights for real-time visibility of global plant operations Reduced production deferrals Contributing to 2-4% higherglobal operations efficiency Improved safety, engineering productivity, data visibility & efficient decision making Connected Optimized Insights Largest PredixAPM deployment at scale covering systems + platforms Machine learning + digital twin analytics Full deployment ... cover 400-600 assets & asset classes, deployed 20MM+ tags Next Steps: Expansion into reliability management + inspection Events, alerts, workflows $100MM+ bottom line impact per 1% efficiency improvement |
New Baker Hughes Delivering Outcomes that Matter Underutilized data sets Digital use cases Desired customer outcomes Opportunity Equipment & Process Reliability Automation & Remote Operations Production Optimization Field Service Enablement Design-build-operate collaboration Increase daily production Reduce cost / barrel Maximize ultimate recovery Safety Increase booked reserves ~2-5% operating efficiency ~20-30% cost op-ex reduction ~20-40% improvement in RoA Reduced recordables ~8-15% increase in production Source: GE analysis |
The Value is in the Twin oVibration oFlow oPressure oTemperature oFuel Gas quality oWeather oService/cycle type oCombustion Mode Learning Modes Human Expertise Fleet Transfer Similar Machines Simulations Emerging Technology: Connected Twinso Optimalconfigurations o Failuremode identification o Optimalcontrols o New algorithms o New security and fraud mitigation techniques Potential Use Cases o30k artificial lift systems oDrilling tools Key Process Parameters Fleet Monitoring Results Gold Data Physical + Digital Models Learning Analytics Building Blocks: 3-15% GE reliability improvement realized |
Digital Capabilities Deliver Smarter Drilling Operations = Decisions ..Real-time bottom hole assembly condition monitoring ..Faster response to operational upsets ..Machine learning, data analytics, unleash prediction ..New equipment mobilization, tool dispatch, optimal resource allocation ..Influence design & build Benefits of Accelerating Digital Transformation Reservoir Navigation System Measurement While Drilling Casing Liner System Lift System 12-20% average industry drilling NPT 20-30% anticipated reliability improvement ~$15B+ industry productivity opportunity Sources: GE, BHI analyses |
Technology Leadership Art Soucy, Kishore Sundararajan |
Leading Technology Driving Value Across Portfolio ..Rotary drilling tools leveraging GE expertise ..Advanced wellbore trajectory survey ..Digital integration of completion activity ..Advanced materials for harsh environment ..Remote monitoring ..Advanced analytics ..Integrated advanced sensors ..Life of well performance prediction ..Reservoir dynamics and characterization ..New sensing and modeling techniques ..Advanced Gas Turbine Technology ..Power Gen Equipment ..Highest power density ..Modular Solutions ..Steam Turbine Technology ..Centrifugal & RecipCompressors ..Flexible Mechanical Drive Options Brilliant Drilling Systems LNG/Pipeline Smart Completions Production optimization Reservoir Performance Evaluation Refinery & Petrochemical Service Quality Agility Cost per barrel |
Additive Manufacturing Advancing Technology Baker Hughes investment: $11 million o5 machines o32 downhole parts o24 fewer parts o20% cost reduction oHigher reliability -less parts, no pressure plugs required Manifold check valve GE investment $1.5B+ oThinking additively o845 parts eliminated lasertec-65-shape-h1-jpg $1B+ acquisitions Advanced Turbo Prop -a) (a-subject to customary closing conditions https://pbs.twimg.com/profile_images/582823690519244800/ W7IxZcR6.png GE93_HD7.png |
Electronics Driving Significant Efficiencies in Drilling People related negative productivity by top 4 OFS companies since 2014 Improved electronics, sensor and analytical capability critical to success 1-2-1 Strategy o1tool o2people at the rig o1year of experience $3B+ Sources: BHI analysis, public filings |
Autonomous Drilling Systems now a Possibility oIslands of autonomy oNo integrated system oPockets of expertise oSystems incompatible oAutomated drilling systems oNew business model oImproved safety, lower risk for employees Image result for drilling rig system schematic 2016 2020 |
GE Store driving Technology Productivity in Drilling + Battery technology .Downhole rechargeable batteries + GE Healthcare technology .Advanced sensor analytics (i.e. NMR, acoustics) + Silicon Carbide & hybrid electronics techn. . New high temperature platform + Systems modeling & integration .Short BHA (From 65' to 30') + Fluid mechanics science .Downhole power generation + Material science .Corrosion & Wear resistant BHA + Rotating machinery experience .Reliable Rotary Steerable Systems (RSS) + Bit composite encapsulated sensors.Accurate well placement |
Operations Optimization Jody Markopoulos |
Digital Thread improving Efficiencies at BHI + GE Sourcing data lake On-the-move sourcing analytics oEnabling 4%+external deflation Engineering digital thread.png ..NPI Cycle ..Product Cost Commercial digital thread.png ..Funnel size ..Convertibility Supply Chain digital thread.png ..Inventory turns ..Lead time Services digital thread.png ..Asset reliability ..FSE utilization Installed base mining Virtual validation Subsea tree 3D model oDefect reduction by 80% digital thread.png digital thread.png digital thread.png BentlyNevada vibration systems o$24MM upgrades |
Supply Optimization ... Day 1 Focus *2015 spend ~80% overlap on sourcing categories* Mechanical12% Electronics 7% Logistics9% Raw Material8% Aux Equipment16% Other20% Indirect28% Supply base rationalization oDeeper, stronger supply base oGlobal risk management Procurement infrastructure oVolume efficiency oProcess standardization and automation Value engineering oShould cost oProduct standardization Landed cost optimization oLogistics efficiency oMake/buy trade-offs Big Data Analytics 20% Cost 15% Supplier Proven track record ... Examples: Focus Areas Electronics Center of Excellence |
Optimizing Fulfilment ... Service Delivery Excellence Asia Pacific Americas Europe, Middle East & Africa Operational excellence Lean Culture -2x throughput Brilliant Factory -. 25% lead time Multi-modal facilities Competitive scale -.responsiveness Advanced manufacturing -50% part reduction 250 203 BHI locations * GE locations 453 162 145 307 99 67 166 * excludes chemical storage |
Brilliant Factory: Talamona, Italy 25% % Lead time IMPROVEMENT 10+ Technologies From 5 axis EDM to Laser Weld Programming & Simulation From machining (800+ tools) to Laser scanning (700+ holes/unit) image9.png image10.png image11.jpeg Predictive approach w/ data collection & software 5 Suppliers to ONE 10 operations in a SINGLE line 10 operations in a SINGLE line Potential use cases ~4,000/year Sub Surface Safety Valve components ~1,100/year Drilling Motor Radial Bearings |
Integration Status Update UwemUkpong |
Creating value Cost 2018F From revenue 2020F ~$0.7 ~$1.6 Synergies ~$1.2 ~$0.4 ~$0.6 ~$0.1 (EBITDA $ in billions) 2020F EBITDA synergy benefits +Revenue synergies +Sourcing/procurement improvements +Manufacturing, service footprint rationalization +Process optimization +SG&A consolidation ~$0.4 ~$0.4 ~$0.2 ~$0.2 ~$0.4 |
Integration planning oJoint integration planning launched, led by Derek Mathieson and Uwem Ukpong oAppointed integration planning team of 30 senior leaders from Baker Hughes and GE ..Combined hundreds of years in OFS and GE ..Mix of functions, regions and product/service lines ..Team planning sessions complete at GE's Crotonvillelearning center oJoint Baker Hughes/GE Steering Committee of senior executives oLeveraging prior integration experience from both companies oEmployee outreach and communications ongoing oRegulatory process underway |
Focused on Customers and Value Creation from Day 1 ..Commitment to Health Safety and Environment ..Customer focus and relationships ..Technology expertise and innovation ..Service culture ..Talent and development Taking the best of both organizations Targeted work programs Strategy and operating model for NewCo Integration and synergy capture planning |
Summary Lorenzo Simonelli |
Financial Overview ($ in billions) Key metrics Revenue ~$32 ~$28 '15 '18F 2015 Adjusted EBITDA '16E cost out Synergies -Cost -From revenue Lower volume / price 2018F Adjusted EBITDA Restructuring / other charges 2018F EBITDA ~$4.8 ~1.3 ~0.6 ~0.1 ~(1.4) ~$5.5 ~(0.3) ~$5.2 Adjusted EBITDA-a) $4.8 ~$5.5 (a-EBITDA and Adjusted EBITDA are non-GAAP measures. See the notes to financial data included on page 52 for additional information. Totals may not add due to use of rounded numbers. |
Summary ..Unmatched fullstreamcapability ..Creating the productivity leader for the industry ..Digital capability will shape industry over next decade ..GE Store will be key advantage: Commercial + Technical ..Disciplined capital allocation: high-margin, high-return portfolio ..Integration planning underway ... focused on customers + value creation |
Q & A |
Disclaimers & Notes |
Additional Information and Where to Find It In connection with the proposed transaction between GE and Baker Hughes Incorporated ("BHI"), Bear Newco, Inc. ("Newco") willprepare and file with the SEC a registration statement on Form S-4 that will include a combined proxy statement/prospectus of Newco and BHI (the "Combined Proxy Statement/Prospectus"). BHI and Newco will prepare and file the Combined Proxy Statement/Prospectus with the SEC, and BHI will mail the Combined Proxy Statement/Prospectus to its stockholders and file other documents regarding the proposed transaction with the SEC. This communication is not a substitute for any proxy statement, registration statement, proxy statement/prospectus or other documents BHI and/or Newco may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THE COMBINED PROXYSTATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, ANY AMENDMENTS OR SUPPLEMENTS TO THE COMBINED PROXY STATEMENT/PROSPECTUS, AND OTHER DOCUMENTS FILED BY BHI OR NEWCO WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION, BECAUSE THESE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders will be able to obtain free copies of the Combined Proxy Statement/Prospectus and other documents filed with the SEC by BHI and/or Newco through the website maintained by the SEC at www.sec.gov. Investors and security holders will also be able to obtain free copies of the documents filed by Newco and/or BHI with the SEC on BHI's website at http://www.bakerhughes.com or by contacting BHI Investor Relations at alondra.oteyza@bakerhughes.com or by calling +1-713-439-8822. No Offer or Solicitation This communication is for informational purposes only and not intended to and does not constitute an offer to subscribe for, buyor sell, the solicitation of an offer to subscribe for, buy or sell or an invitation to subscribe for, buy or sell any securities or the solicitation of any vote or approval in any jurisdiction pursuantto or in connection with the proposed transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law. Participants in the Solicitation GE, BHI, Newco, their respective directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of proxies in connection with the proposed transaction, including a description of their direct or indirect interests, by security holdings or otherwise, will be set forthin the Combined Proxy Statement/Prospectus and other relevant materials when it is filed with the SEC. Information regarding the directors and executive officers of GE is contained in GE's proxy statement for its 2016 annual meeting of stockholders, filed with the SEC on March 16, 2016, its Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the SEC on February 26, 2016, its Quarterly Report on Form 10-Q/A for the quarter ended September 30, 2016, which was filed with the SEC on November 9, 2016 and certain of its Current Reports filed on Form 8-K.Information regarding the directors and executive officers of BHI is contained in BHI's proxy statement for its 2016 annual meeting of stockholders, filed with the SEC on April 11, 2016, itsAnnual Report on Form 10-K/A for the year ended December 31, 2015, which was filed with the SEC on February 19, 2016, its Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 which was filed with the SEC on October 25, 2016 and certain of its Current Reports filed on Form 8-K. These documents can be obtained free of charge from the sources indicated above |
Caution concerning forward-looking statements This communication contains "forward-looking" statements as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995, including statements regarding the proposed transaction between GE and BHI. All statements, other than historical facts, including statements regarding the expected timing and structure of the proposed transaction; the ability of the parties to complete the proposed transaction considering the various closing conditions; the expected benefits of the proposed transaction such as improved operations, enhanced revenues andcash flow, synergies, growth potential, market profile, customers' business plans and financial strength; the competitive ability and position of the combined company following completion of the proposed transaction, including the projected impact on GE's earnings per share;the projected future financial performance of GE Oil & Gas, BHI and Newco; oil and natural gas market conditions; costs and availability of resources; legal, economic and regulatory conditions; and any assumptions underlying any of the foregoing, are forward-looking statements. 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, (1) that one or more closing conditions to the transaction, including certain regulatory approvals, may not be satisfied or waived, on a timely basis or otherwise, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the proposed transaction, may require conditions, limitations or restrictions in connection with such approvals or that the required approval by the stockholders of BHI may not be obtained; (2)the risk that the proposed transaction may not be completed in the time frame expected by GE or BHI, or at all; (3) unexpected costs, charges or expenses resulting from the proposed transaction; (4) uncertainty of the expected financial performance of the combined company following completion of the proposed transaction; (5) failure to realize the anticipated benefits of theproposed transaction, including as a result of delay in completing the proposed transaction or integrating the businesses of GE, BHI and Newco; (6) the ability of the combined company to implement its business strategy; (7) difficulties and delays in achieving revenue and cost synergies of the combined company; (8) inability to retain and hire key personnel; (9) the occurrence of any event that could give rise to termination of the proposed transaction; (10) the risk that stockholder litigation in connection with the proposed transaction or other settlements or investigations may affect the timing or occurrence of the contemplated merger or result in significant costs of defense, indemnification and liability; (11) evolving legal, regulatory and tax regimes; (12) changes in general economic and/or industry specific conditions, including oil price changes; (13) actions by third parties, including government agencies; and (14) other risk factors as detailed from time to time in GE's and BHI's reports filed with the SEC, including GE's and BHI's annual report on Form 10-K, periodic quarterly reports on Form 10-Q, periodic current reports on Form 8-K and other documents filed with the SEC. The foregoing list of important factors is not exclusive. Any forward-looking statements speak only as of the date of this communication. Neither GE nor BHI undertakes any obligation to update any forward-looking statements, whether as a result of new information or development, future events or otherwise, except as required by law. Readers are cautioned not toplace undue reliance on any of these forward-looking statements. |
Overall oProforma financials for Baker Hughes, a GE Company reflect estimates of the combined performance of GE Oil & Gas and BHI. For GE Oil & Gas, the estimates are based on internal performance measures as described below. For BHI, the estimates are based on BHI's reported earnings as described below. GE Oil & Gas oRevenue and Segment Profit represent reported amounts disclosed as industrial operating segment results within General Electric Company's annual and quarterly SEC filings, which are prepared in conformity with U.S. generally accepted accounting principles. Such information has been preparedsolely for purposes of consolidation by GE, and not for stand-alone financial reporting purposes. oSegment revenues include revenues and other income related to the segment. Segment profit is determined based on internal performance measures used by the Chief Executive Officer (CEO) to assess the performance of each business in a given period. In connection with that assessment, theCEO may exclude matters such as charges for restructuring; rationalization and other similar expenses; acquisition costs and other related charges; technology and product development costs; certain gains and losses from acquisitions or dispositions; and litigation settlements or other charges, for which responsibility preceded the current management team. Intercompany transactions are reflected in Revenue and Segment Profit on the basis of GE policies and procedures. oSegment profit excludes the portion of earnings or loss attributable to non-controlling interests of consolidated subsidiaries, and as such only includes the portion of earnings or loss attributable to our share of the consolidated earnings or loss of consolidated subsidiaries. Segment profit also excludes interest and other financial charges and income taxes. For purposes of this presentation, segment profit may also be referred to as EBIT. Certain GE corporate costs, such asshared services, employee benefits and information technology are allocated to our segments based on usage. A portion of the remaining corporate costs is allocated based on each segment's relative net cost of operations. Baker Hughes oRevenue and Adjusted EBITDA have been presented on a consistent basis for 2015 with BHI's reported earnings, including adjustments such as, but not limited to, impairment and restructuring charges, merger and related costs, inventory adjustments and litigation settlements. For more detail, refer to BHI's earnings release for the year ended December 31, 2015. |