Antidilutive securities excluded from diluted EPS calculation (in shares)

  
Baker Hughes CompanyNotes to Unaudited Condensed Consolidated Financial StatementsAn exchange agreement exists between GE, BHH LLC, and us, ("Exchange Agreement") where GE is entitled to exchange its holding in our Class B common stock, and associated LLC Units, 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 Baker Hughes, an amount of cash equal to the aggregate value (determined in accordance with the terms of the Exchange Agreement) 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 three and nine months ended September 30, 2022 and 2021, such exchange is not reflected in diluted net income (loss) per share as the assumed exchange is not dilutive.For the three months ended September 30, 2022 and the nine months ended September 30, 2022 and 2021, we excluded all outstanding equity awards from the computation of diluted net loss per share because their effect is antidilutive. For the three months ended September 30, 2021, Class A diluted shares include the dilutive impact of equity awards except for approximately 5 million options that were excluded because the exercise price exceeded the average market price of the Class A common stock and is therefore antidilutive.NOTE 13. FINANCIAL INSTRUMENTSRECURRING FAIR VALUE MEASUREMENTSOur assets and liabilities measured at fair value on a recurring basis consists of derivative instruments and investment securities.

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|  | September 30, 2022 | December 31, 2021 |
|  | Level 1 | Level 2 | Level 3 | Net Balance | Level 1 | Level 2 | Level 3 | Net Balance |
| Assets |   |   |   |  |  |  |  |  |
| Derivatives | $ | —  |  | $ | 60  |  | $ | —  |  | $ | 60  |  | $ | —  |  | $ | 29  |  | $ | —  |  | $ | 29  |  |
| Investment securities | 848  |  | —  |  | 1  |  | 849  |  | 1,033  |  | —  |  | 8  |  | 1,041  |  |
| Total assets | 848  |  | 60  |  | 1  |  | 909  |  | 1,033  |  | 29  |  | 8  |  | 1,070  |  |
|  |  |  |  |  |  |  |  |  |
| Liabilities |  |  |  |  |  |  |  |  |
| Derivatives | —  |  | (119) |  | —  |  | (119) |  | —  |  | (49) |  | —  |  | (49) |  |
| Total liabilities | $ | —  |  | $ | (119) |  | $ | —  |  | $ | (119) |  | $ | —  |  | $ | (49) |  | $ | —  |  | $ | (49) |  |

There were no transfers to, or from, Level 3 during the nine months ended September 30, 2022.The following table provides a reconciliation of recurring Level 3 fair value measurements for investment securities:

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| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |
|  | 2022 | 2021 |
| Balance at January 1 | $ | 8  |  | $ | 30  |  |
|  |  |  |
| Proceeds at maturity | (7) |  | (21) |  |
|  |  |  |
| Balance at September 30 | $ | 1  |  | $ | 9  |  |

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 condensed consolidated statement of income (loss) on account of any Level 3 instrument still held at the reporting date.  Baker Hughes Company 2022 Third Quarter Form 10-Q | 16  

