Baker Hughes 2004 Annual Report Download

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Baker฀Hughes฀Incorporated
3900฀Essex฀Lane฀
Houston,฀TX฀77027
P.O.฀Box฀4740฀
Houston,฀TX฀77210-4740
(713)฀439-8600
www.bakerhughes.com
Baker฀Hughes฀Incorporated฀฀2004฀Annual฀Report฀and฀Proxy฀Statement
Core฀Value฀฀As฀a฀Core฀Value,฀Teamwork฀defines฀an฀open฀฀
culture฀in฀which฀employees฀share฀ideas,฀information฀and฀
resources฀to฀serve฀our฀customers,฀solve฀problems฀and฀achieve฀
common฀performance฀objectives.฀
Enterprise฀Teamwork฀฀Fostered฀by฀cross-divisional฀manage-
ment฀councils฀and฀shared฀support฀services,฀enterprise-wide฀
teamwork฀enables฀Baker฀Hughes฀and฀its฀seven฀divisions฀to฀
leverage฀the฀capabilities฀of฀the฀entire฀company.
Division฀Teamwork฀฀At฀each฀Baker฀Hughes฀division,฀success฀
depends฀on฀Teamwork฀between฀technology,฀administrative฀and฀
global฀operations฀groups.฀Our฀strong฀divisional฀brand฀cultures฀
encourage฀loyalty฀and฀cooperation฀within฀each฀business฀unit.
Regional฀Teamwork฀฀Through฀Teamwork,฀experts฀from฀our฀
seven฀divisions฀collaborate฀in฀the฀world’s฀major฀oilfield฀regions฀
to฀operate฀more฀efficiently,฀deliver฀customer฀solutions,฀and฀
identify฀new฀business฀opportunities฀for฀Baker฀Hughes.
Teamwork฀with฀Customers฀฀Teamwork฀enables฀us฀to฀deliver฀
unsurpassed฀value฀to฀our฀clients.฀Baker฀Hughes฀employees฀
work฀closely฀with฀customers฀to฀provide฀technology฀solutions฀
that฀cut฀costs,฀reduce฀risk,฀and฀increase฀productivity.
>>> ฀
>>> ฀
>>> ฀
>>> ฀
>>> ฀
TEAMWORK
Baker฀Hughes฀Incorporated฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀2004฀Annual฀Report฀and฀Proxy฀Statement

Table of contents

  • Page 1
    Baker฀Hughes฀Incorporated฀฀2004฀Annual฀Report฀and฀Proxy฀Statement TEAMWORK

  • Page 2
    ...฀ identify฀new฀business฀opportunities฀for฀Baker฀Hughes. >>>฀ Teamwork฀with฀Customers฀฀Teamwork฀enables฀us฀to฀deliver฀ unsurpassed฀value฀to฀our฀clients.฀Baker฀Hughes฀employees฀ work฀closely฀with฀customers฀to฀provide฀technology฀solutions...

  • Page 3
    ...;฀the฀Earth฀ImagerSM฀ service฀for฀acquiring฀borehole฀images฀in฀ oil-based฀drilling฀fluids;฀and฀the฀Predator฀ XPSM฀perforating฀system฀to฀maximize฀ connectivity฀with฀the฀reservoir. Baker฀Hughes฀Drilling฀Fluids฀ Baker฀Hughes฀Drilling฀Fluids...

  • Page 4
    ...฀fields.฀In฀China's฀Bohai฀Bay,฀ Baker฀Hughes฀bits,฀drilling฀and฀ evaluation฀systems,฀perforating฀ services,฀completions,฀and฀฀ ESP฀systems฀contributed฀to฀฀ successful฀projects. Baker฀Petrolite฀ Baker฀Petrolite฀provides฀chemical฀technology...

  • Page 5
    ...business.฀Furthermore,฀management฀uses฀ ฀ operating฀profit฀internally฀as฀a฀measure฀of฀the฀performance฀of฀the฀company's฀operations. 2004 Revenues by Region Canada, 7% USA, 35% Latin America, 10% Europe, 15% Africa, 8% Middle East, 9% Asia, 10% Russia/CIS, 6% $1,200...

  • Page 6
    ...฀Framework. Chad฀C.฀Deaton฀joined฀Baker฀Hughes฀฀ as฀chairman฀of฀the฀board฀and฀chief฀executive฀officer฀on฀October฀25,฀2004.฀As฀the฀ new฀chairman,฀Mr.฀Deaton฀recently฀shared฀ these฀insights฀about฀the฀company,฀its฀people฀and฀its...

  • Page 7
    ...live฀and฀work฀in฀a฀variety฀ of฀cultures.฀ Baker฀Hughes฀is฀a฀service฀company.฀ We฀should฀remind฀ourselves฀every฀day฀that฀ our฀goal฀is฀to฀provide฀quality฀services฀to฀ our฀customers,฀reducing฀non-productive฀ Technology฀innovation฀is...

  • Page 8
    ...฀Annual฀Report฀on฀ Form฀10-K฀of฀Baker฀Hughes฀Incorporated฀for฀its฀year฀ended฀December฀31,฀2004.฀The฀use฀of฀"Baker฀Hughes,"฀"our,"฀"we"฀and฀similar฀terms฀ are฀not฀intended฀to฀describe฀or฀imply฀particular฀corporate฀organizations...

  • Page 9
    New฀Baker฀Hughes฀technologies฀improved฀฀ drilling฀performance฀in฀2004.฀Here,฀at฀Hughes฀ Christensen,฀technicians฀prepare฀the฀drilling฀฀ simulator฀to฀test฀a฀new฀Genesis ฀XT฀PDC฀drill฀฀ bit฀under฀downhole฀conditions.฀ ® 2004฀Annual...

  • Page 10
    In฀2004,฀Baker฀Hughes฀deployed฀several฀innovative฀ technologies฀for฀formation฀evaluation.฀Here,฀technicians฀assemble฀an฀INTEQ฀Acoustic฀Properties฀ eXplorer ฀logging-while-drilling฀system,฀developed฀ using฀Baker฀Atlas฀wireline฀technology. SM ...

  • Page 11
    ...฀business฀grew฀worldwide฀as฀customers฀strived฀to฀optimize฀ mature฀field฀production.฀Baker฀Petrolite฀ established฀a฀venture฀with฀Sonangol,฀the฀ National฀Oil฀Company฀in฀Angola.฀The฀division's฀pipeline฀management฀group฀had฀ strong฀demand...

  • Page 12
    ...to฀clients฀so฀they฀can฀make฀ better฀decisions,฀faster.฀Baker฀Atlas฀also฀ began฀new฀service฀operations฀in฀Equatorial฀ Guinea,฀India,฀Kazakhstan฀and฀Russia฀during฀the฀year. Corporate฀Culture฀ I฀have฀been฀impressed฀with฀the฀฀ company...

  • Page 13
    Baker฀Hughes฀completion฀systems฀were฀installed฀ on฀major฀deepwater฀projects฀in฀2004.฀Here,฀Baker฀ Oil฀Tools฀field฀service฀representatives฀prepare฀a฀ large-diameter฀service฀packer฀to฀be฀run฀in฀a฀deepwater฀well. 2004฀Annual฀Report...

  • Page 14
    ...฀him฀the฀best฀in฀his฀ future฀endeavors. In฀closing,฀I฀would฀like฀to฀thank฀our฀฀ customers฀and฀our฀employees฀for฀making฀ 2004฀a฀year฀of฀record฀success฀for฀Baker฀ Hughes.฀This฀organization฀is฀a฀strong฀technology฀leader,฀whose...

  • Page 15
    ...STOCKHOLDERS฀OF฀BAKER฀HUGHES฀INCORPORATED: The฀Annual฀Meeting฀of฀the฀Stockholders฀of฀Baker฀Hughes฀Incorporated฀("Company"฀or฀"Baker฀Hughes")฀will฀be฀held฀at฀the฀ offices฀of฀the฀Company,฀3900฀Essex฀Lane,฀Suite฀210,฀Houston,฀Texas฀on...

  • Page 16
    ... Compensation฀Committee฀Interlocks฀and฀Insider฀Participation฀...฀ Corporate฀Performance฀Graph Audit/Ethics฀Committee฀Report Proposal฀No.฀2,฀Ratification฀of฀the฀Company's฀Independent฀Auditor฀for฀Fiscal฀Year฀2005฀ ...฀ Fees฀Paid฀to฀Deloitte...

  • Page 17
    ...฀of฀proxies฀by฀the฀Board฀of฀Directors฀of฀Baker฀ Hughes฀Incorporated,฀a฀Delaware฀corporation฀("Company,"฀ "Baker฀Hughes,"฀"we,"฀"us"฀and฀"our"),฀to฀be฀voted฀at฀ the฀Annual฀Meeting฀of฀Stockholders฀scheduled฀to฀be฀held฀ on...

  • Page 18
    ...Annual฀Meeting฀and฀entitled฀to฀vote฀on฀the฀matter฀is฀ required฀for฀the฀approval฀of฀the฀ratification฀of฀Deloitte฀&฀฀ Touche฀LLP฀as฀the฀Company's฀Independent฀Auditor...,฀California฀94104 ฀5.9%฀ 2฀฀฀฀Baker฀Hughes฀Incorporated

  • Page 19
    ...the฀Board฀and฀Chief฀Executive฀Officer฀of฀Devon฀Energy฀Corpora62฀ tion฀(independent฀energy฀company).฀Mr.฀Nichols฀has฀served฀as฀Chairman฀of฀ Devon฀Energy฀Corporation฀since฀2000,฀as฀Chief฀Executive฀Officer฀since฀1980฀ and฀was฀President...

  • Page 20
    ...฀the฀Board฀and฀Chief฀Executive฀Officer฀of฀Baker฀Hughes฀since฀October฀2004.฀Mr.฀Deaton฀was฀President฀and฀Chief฀Executive฀Officer฀of฀Hanover฀ Compressor฀Company฀(compression฀services)฀from฀2002฀through฀October฀2004.฀ He฀was฀a฀Senior...

  • Page 21
    ...฀Executive฀Officer฀of฀Reading฀Tube฀Corporation฀from฀1982฀to฀1996.฀ Mr.฀Lash฀is฀a฀director฀of฀Ivy฀Animal฀Health,฀Inc.,฀Vesper฀Corporation฀and฀ Webridge,฀Inc.฀Mr.฀Lash฀is฀a฀director฀of฀City฀Center฀55th฀Street฀Foundation,฀Inc...

  • Page 22
    ...the฀"About฀Baker฀Hughes"฀ section฀of฀the฀Company's฀website฀at฀www.bakerhughes.com฀ and฀are฀also฀available฀upon฀request฀to฀the฀Company's฀Corporate฀Secretary. Board฀of฀Directors During฀the฀fiscal฀year฀ended฀December฀31,฀2004,฀the฀ Board...

  • Page 23
    ...฀can฀be฀ accessed฀electronically฀under฀the฀"About฀Baker฀Hughes"฀section฀of฀the฀Company's฀website฀at฀www.bakerhughes.com.฀The฀ General฀Auditor฀and฀the฀Corporate฀internal฀audit฀function฀ report฀directly฀to฀the฀Audit/Ethics฀Committee.฀The...

  • Page 24
    ...the฀Company's฀website฀at฀www. bakerhughes.com฀and฀are฀also฀available฀upon฀request฀to:฀ Chairman,฀Governance฀Committee฀of฀the฀Board฀of฀Directors,฀ P.O.฀Box฀4740,฀Houston,฀Texas฀77210-4740,฀or฀to฀the฀Corporate฀Secretary฀c/o฀Baker฀Hughes...

  • Page 25
    ...MANAGEMENT...฀ officers฀as...Company.฀Up฀to฀19,355฀shares฀are฀subject฀to฀a฀Sales฀Plan฀intended฀to฀comply฀with฀Rule฀10b5-1฀under฀the฀SEC฀rules. (9)฀ Includes฀10,000฀and฀9,325฀shares฀issued฀as฀restricted฀stock฀awards฀on฀April฀28,฀2004...

  • Page 26
    ...฀and฀the฀four฀most฀highly฀compensated฀ executive฀officers฀of฀the฀Company฀for฀services฀rendered฀to฀the฀Company฀and฀its฀subsidiaries฀for฀the฀fiscal฀years฀ended฀December฀31,฀ 2004,฀2003฀and฀2002.฀Compensation฀information฀is฀also...

  • Page 27
    ... ฀ 90,269 ฀ 69,145 *฀฀Mr.฀Wiley฀retired฀on฀October฀25,฀2004฀and฀was฀not฀vested฀in฀the฀Company฀contributed฀portion฀of฀his฀SRP฀or฀his฀฀ ฀ Baker฀Hughes฀Pension฀Plan฀Account.฀Thus,฀Mr.฀Wiley฀is฀not฀eligible฀to฀receive฀these...

  • Page 28
    ...bear฀a฀relationship฀to฀the฀compensation฀cost฀to฀the฀Company฀or฀ potential฀gain฀realized฀by฀an฀executive.฀The...฀of฀his฀2004฀options฀vested฀with฀a฀three-year฀exercise฀period฀from฀October฀25,฀2004. 12฀฀฀฀Baker฀Hughes฀Incorporated

  • Page 29
    ...2004,฀the฀last฀trading฀day฀of฀2004. LONG-TERM฀INCENTIVE฀PLAN฀ FOR฀2004...Under฀the฀Company's฀2002฀Director฀&฀Officer฀Long-Term฀Incentive฀Plan,฀individuals฀may฀be฀awarded฀target฀shares฀...Morgan฀Stanley฀Oil฀Services฀Index฀Companies฀ ฀ 95th...

  • Page 30
    ...the฀Baker฀Hughes฀Incorporated฀ Pension฀Plan,฀effective฀January฀1,฀2002,฀to฀provide฀benefits฀ to฀its฀U.S.฀employees.฀(Employees฀outside฀the฀U.S.฀are฀covered฀ under฀different฀retirement฀plans.)฀Employees฀who฀are฀officers฀ of฀the฀Company...

  • Page 31
    ...฀ of฀a฀similar฀size฀to฀the฀Company;฀and •฀ benefits฀and฀perquisites฀that฀other฀officers฀and฀employees฀ of฀the฀Company฀are฀entitled฀to฀receive. Mr.฀Deaton's฀base฀salary฀is฀to฀be฀reviewed฀at฀least฀annually฀ during฀the฀term฀of...

  • Page 32
    ...฀is฀greatest฀(his฀ "Highest฀Base฀Salary"); (b)฀ a฀lump฀sum฀payment฀equal฀to฀the฀Named฀Officer's฀ expected฀value฀target฀percentage฀for฀his฀incentive฀ bonus฀under฀the฀Company's฀1995฀Employee฀Annual฀ Incentive฀Plan,฀as฀amended,฀for...

  • Page 33
    ...฀that฀has฀been฀ allocated฀or฀awarded฀to฀the฀Named฀Officer฀for฀a฀ completed฀fiscal฀year฀or฀other฀measuring฀period฀ preceding฀the฀date฀of฀termination฀under฀the฀ Company's฀1995฀Employee฀Annual฀Incentive฀ Compensation฀Plan,฀as฀amended...

  • Page 34
    ... inform฀the฀Company's฀stockholders฀of฀the฀Compensation฀ Committee's฀compensation฀policies฀for฀executive฀officers฀and฀ the฀rationale฀for฀compensation฀paid฀to฀the฀Chief฀Executive฀ Officer฀of฀the฀Company. 18฀฀฀฀Baker฀Hughes฀Incorporated

  • Page 35
    ...฀long-term฀performancebased฀stock฀or฀cash฀awards฀granted฀pursuant฀to฀the฀Company's฀ Long-Term฀Incentive฀Plan฀and฀the฀Baker฀Hughes฀Incorporated฀ 2002฀Director฀&฀Officer฀Long-Term฀Incentive฀Plan.฀The฀Company฀may฀from฀time฀to฀time฀pay...

  • Page 36
    ...฀from฀each฀executive.฀Target฀bonus฀ awards฀range฀from฀45%฀to฀100%฀of฀base฀salary. Each฀of฀the฀named฀executive฀officers฀received฀an฀annual฀ bonus฀based฀on฀their฀contribution฀to฀the฀2004฀financial฀performance.฀Pursuant฀to฀Mr...

  • Page 37
    ...Compensation฀Committee฀and฀the฀Company's฀Board฀of฀Directors฀approved,฀subject฀to฀stockholder฀ approval,฀the฀Baker฀Hughes฀Incorporated฀2002฀Director฀&฀Officer฀Long-Term฀Incentive฀Plan฀for฀performance-related฀awards฀ for฀senior฀executives฀in...

  • Page 38
    ...฀held฀11฀meetings฀and฀otherwise฀met฀and฀communicated฀with฀management฀and฀with฀Deloitte฀&฀Touche฀LLP,฀the฀ 22฀฀฀฀Baker฀Hughes฀Incorporated Company's฀Independent฀Auditor฀for฀2004.฀Deloitte฀&฀Touche฀ discussed฀with฀the฀Audit/Ethics...

  • Page 39
    ...audit฀of฀the฀Company's฀annual฀financial฀statements฀and฀review฀of฀quarterly฀financial฀statements,฀audit฀services฀related฀to฀Management's฀Report฀ on฀Internal฀Control฀over฀Financial฀Reporting฀and฀audit฀services฀ related฀to฀the฀effectiveness...

  • Page 40
    ...fill฀a฀vacancy฀on฀ the฀Company's฀Board฀of฀Directors฀will฀hold฀office฀only฀until฀ the฀next฀Annual฀Meeting฀of฀Stockholders.฀Each฀of฀the฀directors฀have฀agreed฀to฀shorten฀their฀existing฀terms฀and฀stand฀for฀ 24฀฀฀฀Baker฀Hughes...

  • Page 41
    ...accounting฀regulations,฀to฀improve฀corporate฀financial฀disclosure,฀independent฀ oversight฀of฀auditors,฀and฀the฀independence฀and฀effectiveness฀ of฀corporate...annual฀meeting. In฀adopting฀such฀a฀policy...Baker฀Hughes"฀section฀of฀ the฀Company's฀website...

  • Page 42
    ...Corporate฀Secretary,฀c/o฀Baker฀Hughes฀Incorporated฀3900฀Essex฀Lane,฀Suite฀ 1200,฀Houston,฀Texas฀77027-5177฀between฀October฀16,฀2005฀ and฀November฀15,฀2005฀to฀be฀properly฀nominated฀before฀the฀ 2006฀Annual฀Meeting,฀although฀the฀Company...

  • Page 43
    ...฀such฀ as฀a฀managing฀director฀occupying฀a฀comparable฀position฀ or฀executive฀officer,฀or฀occupies฀a฀similar฀position฀and฀ which฀provides฀accounting,฀consulting,฀legal,฀investment฀ banking฀or฀financial฀advisory฀services฀to฀the฀Company...

  • Page 44
    ...principal฀financial฀officer,฀ principal฀accounting฀officer,฀controller,฀public฀accountant,฀ auditor฀or฀person฀performing฀similar฀functions; (c)฀ Experience฀overseeing฀or฀assessing฀the฀performance฀ of฀companies฀or฀public฀accountants฀with฀respect...

  • Page 45
    ...฀the฀Company,฀as฀well฀as฀a฀report฀describing฀the฀(i)฀independent฀auditors'฀internal฀quality-control฀procedures;฀and฀(ii)฀material฀ issues฀raised฀by฀the฀most฀recent฀internal฀quality-control฀ review฀or฀Public฀Company฀Accounting฀Oversight...

  • Page 46
    ...฀and฀budget,฀and฀receive฀regular฀ reports฀on฀their฀activities,฀including฀significant฀findings฀and฀ management's฀actions.฀Review฀annually฀the฀audit฀of฀the฀ expenses฀of฀the฀Company's฀senior฀management. B-2฀฀฀฀Baker฀Hughes฀Incorporated

  • Page 47
    ...฀questionable฀accounting฀or฀auditing฀matters,฀and฀(iii)฀the฀ protection฀of฀reporting฀employees฀from฀retaliation. •฀ The฀Committee฀shall฀annually฀review฀with฀the฀independent฀ auditors฀any฀audit฀problems฀or฀difficulties฀and฀management...

  • Page 48
    ...set฀forth฀the฀policies฀of฀the฀Board฀of฀ Directors฀("Board")฀of฀Baker฀Hughes฀Incorporated฀("Company")฀regarding฀Board฀...service฀sector฀of฀the฀oil฀and฀gas฀and฀energy฀ related฀industries; v)฀ Will฀dedicate฀sufficient฀time฀to฀Company...

  • Page 49
    ...to฀fill฀vacancies,฀ or฀to฀stand฀for฀election฀at฀the฀next฀Annual฀Meeting฀ of฀Stockholders. ANNEX฀E BAKER฀HUGHES฀INCORPORATED฀ AUDIT/ETHICS฀COMMITTEE฀ GUIDELINES฀FOR฀PRE-APPROVAL฀OF฀AUDIT฀฀ AND฀NON-AUDIT฀FEES฀OF฀INDEPENDENT฀AUDITOR Audit...

  • Page 50
    ANNEX฀F BAKER฀HUGHES฀INCORPORATED฀ CERTIFICATE฀OF฀AMENDMENT฀TO฀RESTATED฀฀ CERTIFICATE฀OF฀INCORPORATION...฀Corporation฀shall฀serve฀for฀ a฀term฀of฀one฀year฀ending฀on฀the฀date฀of฀the฀annual฀ meeting฀of฀stockholders฀following฀the฀annual฀...

  • Page 51
    ...Baker฀Hughes฀Incorporated฀ (Exact฀Name฀of฀Registrant฀as฀Specified฀in฀its฀Charter Delaware฀ (State฀or฀Other฀Jurisdiction฀ of฀Incorporation฀or฀Organization) 3900฀Essex฀Lane,฀Suite฀1200,฀Houston,฀Texas฀ (Address฀of฀Principal฀Executive฀Offices...

  • Page 52
    BAKER฀HUGHES฀INCORPORATED INDEX ฀ ฀ PART...Officers฀of฀the฀Registrant 65 Executive฀Compensation 65 Security฀Ownership฀of฀Certain฀Beneficial฀Owners฀and฀Management 65 Certain฀Relationships฀and฀Related฀Transactions 68 Principal฀Accounting฀Fees฀and฀Services...

  • Page 53
    ...: Baker฀Hughes฀Incorporated 3900฀Essex฀Lane,฀Suite฀1200 Houston,฀TX฀฀77027 Attention:฀Investor฀Relations Telephone:฀(713)฀439-8039 Information฀contained฀on฀or฀connected฀to฀our฀website฀is฀ not฀incorporated฀by฀reference฀into฀this฀annual฀report...

  • Page 54
    ...from฀services฀which฀ can฀run฀on฀either฀wireline฀or฀drill฀pipe. Baker฀Atlas'฀primary฀formation฀evaluation฀and฀wireline฀ completion฀and฀perforating฀competitors฀are฀Schlumberger,฀Halliburton฀Company฀("Halliburton"),฀Precision฀Drilling฀Corporation...

  • Page 55
    ...and฀critical฀wells. Baker฀Oil฀Tools'฀primary฀competitors฀in฀completions฀are฀ Halliburton,฀Schlumberger,฀Weatherford฀International฀Ltd.฀ ("Weatherford"),฀BJ฀Services฀Company฀and฀various฀other฀competitors.฀Its฀primary฀competitors฀in฀workover฀are...

  • Page 56
    Through฀its฀Pipeline฀Management฀Group฀("PMG"),฀Baker฀ Petrolite฀also฀offers฀a฀variety฀of฀products฀and฀services฀for฀the฀ pipeline฀transportation฀industry.฀To฀improve฀efficiency,฀Baker฀ Petrolite฀offers฀custom฀turnkey฀cleaning฀programs฀that...

  • Page 57
    ...,฀update฀and฀refine฀the฀reservoir฀model฀ and฀steer฀the฀well฀into฀the฀optimal฀location฀in฀the฀reservoir. As฀part฀of฀INTEQ's฀mud฀logging฀services,฀engineers฀monitor฀ the฀interaction฀between฀the฀drilling฀fluid฀and฀the฀formation฀and...

  • Page 58
    ...฀industry's฀largest฀diversified฀oilfield฀services฀ providers,฀as฀well฀as฀many฀small฀companies.฀We฀believe฀that฀ the...tax฀of฀$1.5฀million. In฀September฀2004,฀we฀completed฀the฀sale฀of฀Baker฀ Hughes฀Mining฀Tools,฀a฀product฀line฀group฀...

  • Page 59
    ...Chief฀Operating฀Officer฀of฀the฀Company฀ since฀February฀2004.฀Vice฀President,฀Marketing฀and฀ Technology฀of฀the฀Company฀from฀August฀2003฀to฀February฀2004.฀Vice฀President฀of฀the฀Company฀and฀President฀of฀Baker฀Petrolite฀Corporation฀from...

  • Page 60
    ...Company฀since฀1995฀and฀President฀ of฀Baker฀Petrolite฀Corporation฀since฀2003.฀President฀of฀ Baker฀Oil฀Tools฀from฀1992฀to฀2003.฀Employed฀as฀President฀of฀Baker฀Service฀Tools฀from฀1989฀to฀1992฀and฀ Vice฀President฀-฀General฀Manager...

  • Page 61
    .... (g)฀ In฀2002,฀Baker฀Petrolite฀predecessors,฀Hughes฀Christensen฀ predecessors฀and฀two฀of฀our฀former฀subsidiaries฀were฀ identified฀as฀PRPs฀for฀the฀Malone฀site฀located฀on฀Campbell฀ Bayou฀Road฀in฀Texas฀City,฀Texas.฀The฀EPA฀oversees...

  • Page 62
    ...Houston,฀Texas;฀Broken฀Arrow฀and฀฀ Claremore,฀Oklahoma;฀Lafayette,฀Louisiana;฀South฀America฀-฀ various฀cities฀in฀Venezuela;฀and฀Europe฀-฀Aberdeen฀and฀East฀ Kilbride,฀Scotland;฀Liverpool,฀England;฀Celle,฀Germany;฀Belfast,฀ Northern฀Ireland...

  • Page 63
    ...have฀issued฀subpoenas฀to,฀or฀otherwise฀ asked฀for฀interviews฀with,฀current฀and฀former฀employees฀in฀ connection฀with฀the฀investigations฀regarding฀Nigeria,฀Angola฀ and฀Kazakhstan.฀In฀addition,฀we฀have฀conducted฀internal฀ investigations฀into...

  • Page 64
    ...฀corporations฀and฀individuals฀in฀appropriate฀฀ circumstances฀including,฀but฀not฀limited฀to,฀injunctive฀relief,฀฀ disgorgement,฀fines,฀penalties฀and฀modifications฀to฀business฀ practices฀and฀compliance฀programs.฀During฀2004,฀such฀agencies...

  • Page 65
    ...2004฀ November฀1-30,฀2004฀ December฀1-31,฀2004฀ Total฀ -฀ -฀ 32,868฀ 32,868฀ ฀ 43.91฀ $฀ 43.91฀ (1)฀ Represents฀shares฀purchased฀from฀employees฀to฀pay฀the฀option฀exercise฀price฀related...฀Investor฀Services฀LLC.฀The...

  • Page 66
    ...except฀per฀share฀amounts)฀ 2004฀ 2003฀ Year฀Ended฀...accounting฀change฀ Extraordinary฀loss,฀net฀of฀tax฀ Cumulative฀effect฀of฀accounting....2฀ 1,682.4฀ 3,327.8฀ 0.21฀ 0.21฀ 0.46฀ 1,704.5฀ 6,489.1฀ 2,049.6฀ 3,046.7 16 Baker฀Hughes฀Incorporated

  • Page 67
    ...฀States฀(Texas,฀Oklahoma,฀and฀ Louisiana),฀Scotland฀(Aberdeen),฀Germany฀(Celle),฀Northern฀ Ireland฀(Belfast)฀and฀Venezuela฀(Maracaibo).฀We฀operate฀in฀ over฀90฀countries฀around฀the฀world฀and฀employ฀approximately฀ 26,900฀employees฀-฀about...

  • Page 68
    ...2004. During฀2004,฀the฀Baker฀Hughes฀rig฀count฀rose฀to฀its฀highest฀level฀since฀1986,฀as฀oil฀and฀natural฀gas฀companies฀around฀ the฀world...฀of฀our฀customer฀base.฀We฀hire฀and฀train฀ employees฀from฀around฀the฀world฀to฀ensure฀...

  • Page 69
    ...gas.฀The฀U.S.฀-฀offshore฀rig฀count฀decreased฀ 10.2%฀in฀2004฀compared฀with฀2003฀primarily฀related฀to฀a฀ reduced฀level฀of฀spending฀by฀major฀diversified฀oil฀and฀natural฀ gas฀companies฀who฀have฀continued฀to฀redirect฀a฀portion฀of...

  • Page 70
    ...products฀and฀services.฀Oil฀(Bloomberg฀West฀Texas฀Intermediate฀(WTI)฀...China฀ moderates฀from฀the฀extraordinarily฀strong฀growth฀exhibited฀in฀ 2004.฀The฀ongoing฀lack฀of฀excess฀productive฀capacity฀will฀leave฀ the฀energy...Baker฀Hughes฀Incorporated

  • Page 71
    ...in฀2005฀ compared฀with฀2004. Drilling฀Activity฀-฀Based฀upon฀our฀outlook฀for฀oil฀and฀ natural฀gas฀prices฀and฀customer฀spending฀described฀above,฀our฀ outlook฀for฀drilling฀activity,฀as฀measured฀by฀the฀Baker฀Hughes฀ rig฀count,฀is฀as...

  • Page 72
    ...overall฀level฀of฀research฀and฀ engineering฀spending฀by฀oilfield฀services฀companies฀and฀ the฀pace฀at฀which฀new฀technology฀is฀both฀introduced฀ commercially฀and฀accepted฀by฀customers. •฀ Pace฀of฀new฀investment฀-฀the฀investment฀by฀oil...

  • Page 73
    ...฀the฀fair฀value฀of฀stock฀option฀awards฀and฀stock฀ issued฀under฀the฀employee฀stock฀purchase฀plan฀in฀July฀2005,฀...฀for฀our฀products฀ and฀services฀and฀our฀competitors฀strategies฀of฀managing฀capacity.฀While฀the฀commercial฀introduction...

  • Page 74
    ...฀it฀becomes฀evident฀that฀the฀customer฀will฀not฀ make฀the฀required฀payments฀at฀either฀contractual฀due฀dates฀ or฀in฀the฀future.฀At฀December฀31,฀2004฀and฀2003,฀reserves฀ for฀doubtful฀accounts฀totaled฀$50.5฀million,฀or฀3.6%,฀and...

  • Page 75
    ...review฀ the฀carrying฀values฀of฀these฀assets฀for฀impairment฀periodically,฀ and฀at฀least฀annually...฀related฀to฀the฀ assets฀subject฀to฀review.฀...,฀however฀limited,฀that฀...Accounting฀ Standards฀("SFAS")฀No.฀5,฀Accounting฀for฀Contingencies. 2004...

  • Page 76
    ...annually...and฀turnover,฀...2004฀ by฀$1.8฀million. Discontinued฀Operations In฀September฀2004,฀we฀completed฀the฀sale฀of฀Baker฀ Hughes...accounts฀receivable,฀inventories฀and฀other฀assets.฀During฀the฀ second฀quarter฀of฀2004....0฀million฀related฀ to...reported...

  • Page 77
    ... 2004฀increased฀10.7%฀compared฀with฀2003.฀This฀increase฀was฀ primarily฀due฀to฀higher฀marketing฀and฀administrative฀expenses฀ as฀a฀result฀of฀increased฀activity,฀including฀higher฀annual฀employee฀ bonus฀expense,฀and฀increased฀costs฀related...

  • Page 78
    ...฀ based฀on฀our฀organizational฀and฀reporting฀structure.฀Corporate฀and฀other฀assets฀and฀liabilities฀were฀allocated฀to฀the฀ reporting฀units฀to฀the฀extent฀that฀they฀related฀to฀the฀operations฀of฀these฀reporting฀units.฀Valuations฀of฀the...

  • Page 79
    ...ways฀that฀enhance฀the฀ value฀of฀our฀company.฀In฀2004,฀we฀used฀cash฀for฀a฀variety฀ of฀activities...employee฀compensation฀ accruals,฀better฀management฀of฀our฀accounts฀payable฀and฀ $45.3฀million฀less฀in฀net฀income฀tax฀payments฀in฀2004...

  • Page 80
    ...฀for฀the฀ remaining฀60%฀interest฀in฀Luna฀Energy฀L.L.C.฀("Luna"),฀a฀฀ venture฀we฀entered฀into฀in฀2002.฀During฀2004,฀we฀also฀paid฀ $5.6฀million฀in฀settlement฀of฀the฀final฀purchase฀price฀related฀to฀ an฀acquisition฀completed฀in...

  • Page 81
    ... could฀cause฀the฀rating฀agencies฀to฀lower฀our฀credit฀...credit฀ratings฀could฀limit฀or฀preclude฀our...to฀manage฀our...฀payments฀related฀to฀postretirement...reported฀levels฀of฀revenues฀and฀ cash฀flows฀from฀operations฀in฀2004...฀or฀services฀that฀...

  • Page 82
    ...฀measure฀the฀ cost฀of฀employee฀services฀rendered฀in฀exchange฀for฀an฀award฀ of฀liability฀instruments฀at฀its฀current฀fair฀value.฀The฀fair฀value฀of฀ that฀award฀is฀to฀be฀remeasured฀subsequently฀at฀each฀reporting฀ date฀through฀the...

  • Page 83
    ...company฀is฀allowed฀time฀beyond฀the฀financial฀reporting...2004฀and฀2003,฀net฀accounts฀(payable)฀ receivable฀from฀affiliates฀totaled฀$(1.1)฀million฀and฀$0.7฀million,฀respectively.฀There฀were฀no฀other฀significant฀related...risk฀is฀managed฀by฀...

  • Page 84
    ...to฀hedge฀this฀exposure,฀our฀objective฀is฀to฀ manage฀foreign฀currency฀exposure฀by฀maintaining฀a฀minimal฀ consolidated฀net฀asset฀or฀net฀liability฀position฀in฀a฀currency฀ other฀than฀the฀functional฀currency. 34 Baker฀Hughes฀Incorporated

  • Page 85
    ...฀are฀monitored฀on฀a฀continuing฀basis.฀In฀the฀unlikely฀event฀that฀the฀counterparties฀fail฀to฀ meet฀the฀terms฀of฀a฀foreign฀currency฀contract,฀our฀exposure฀ is฀limited฀to฀the฀foreign฀currency฀rate฀differential. 2004฀Form฀10-K 35

  • Page 86
    ...31,฀2004฀฀ has฀been฀audited฀by฀Deloitte฀&฀Touche฀LLP,฀an฀independent฀registered฀public฀accounting฀firm,฀as฀stated฀in฀their฀report฀which฀is฀ included฀herein. Chad฀C.฀Deaton฀ Chairman฀and฀ Chief฀Executive฀Officer ฀ ฀ Houston,฀Texas...

  • Page 87
    ...฀of Baker฀Hughes฀Incorporated Houston,฀Texas We฀have฀audited฀management's฀assessment,฀included฀in฀the฀accompanying฀Management's฀Report฀on฀Internal฀Control฀Over฀ Financial฀Reporting,฀that฀Baker฀Hughes฀Incorporated฀and฀subsidiaries฀(the฀"Company...

  • Page 88
    ...฀of Baker฀Hughes฀Incorporated Houston,฀Texas We฀have฀audited฀the฀accompanying฀consolidated฀balance฀sheets฀of฀Baker฀Hughes฀Incorporated฀and฀subsidiaries฀(the฀"Company")฀as฀of฀December฀31,฀2004฀and฀2003,฀and฀the฀related฀consolidated...

  • Page 89
    ...OF฀OPERATIONS ฀ (In฀millions,฀except฀per฀share฀amounts)฀ 2004฀ Year฀Ended฀December฀31, 2003฀ 2002฀ Revenues฀ Costs...฀ Income฀before฀cumulative฀effect฀of฀accounting฀change฀ Cumulative฀effect฀of฀accounting฀change,฀net฀of฀tax฀ Net฀income...

  • Page 90
    ...Accounts฀receivable฀-฀less฀allowance฀for฀doubtful฀accounts: ฀ ฀ December฀31,฀2004...Accounts฀payable฀ ฀ Short-term฀borrowings฀and฀current฀portion฀of฀long-term฀debt฀ ฀ Accrued฀employee...350.4 $฀ 6,821.3฀ $฀ 6,416.5 40 Baker฀Hughes฀Incorporated

  • Page 91
    ...฀ Issuance฀of฀restricted฀stock฀ ฀ Amortization฀of฀unearned฀compensation,฀฀ ฀ net฀of฀tax฀of฀$1.0฀ ฀ Stock฀issued฀pursuant฀to฀employee฀stock฀plans฀ Balance,฀December฀31,฀2004฀ See฀Notes฀to฀Consolidated฀Financial฀Statements $฀ 3,119...

  • Page 92
    ...(In฀millions)฀ 2004฀ Year฀Ended฀...accounts฀receivable฀ ฀ Change฀in฀inventories฀ ฀ Change฀in฀accounts฀payable฀ ฀ Change฀in฀accrued฀employee...฀Notes฀to฀Consolidated฀Financial฀Statements 42 Baker฀Hughes฀Incorporated 528.2 371.8฀ (7.9)฀ 1.8฀ ...

  • Page 93
    ...Accounting฀Policies Nature฀of฀Operations Baker฀Hughes฀Incorporated฀("Baker฀Hughes")฀is฀engaged฀ in฀the฀oilfield฀services฀industry.฀Baker฀Hughes฀is฀a฀major฀supplier฀of฀wellbore-related...if฀produced฀to฀our฀customer's฀ specifications,฀and฀are฀...

  • Page 94
    ...Lived฀Assets We฀review฀property,฀intangible฀...the฀ related฀assets. We฀perform฀an฀annual฀impairment...customer฀ or฀the฀issuance฀of฀a฀credit฀to฀the฀customer...environmental฀site฀evaluation,฀ remediation฀or฀related฀activities...Baker฀Hughes฀Incorporated

  • Page 95
    ...million฀in฀2004,฀2003฀and฀...฀interest฀rate฀swaps฀to฀manage฀interest฀rate฀risk. At...employee฀is฀required฀to฀pay฀for฀the฀stock.฀ Our฀reported฀net฀income฀does฀not฀include฀any฀compensation฀ expense฀associated฀with฀stock฀option฀awards...

  • Page 96
    ...entity฀to฀measure฀the฀cost฀of฀employee฀services฀received฀in฀exchange฀for฀an฀award฀of฀equity฀instruments฀ based฀on฀the฀grant-date฀fair฀value฀of฀the฀award.฀That฀cost฀will฀ 46 Baker฀Hughes฀Incorporated be฀recognized฀over฀the฀period...

  • Page 97
    ...In฀September฀2004,฀we฀completed฀the฀sale฀of฀Baker฀ Hughes฀Mining฀Tools...accounts฀receivable,฀inventories฀and฀other฀assets.฀During฀the฀ second฀quarter฀of฀2004...value฀and฀a฀loss฀of฀$20.0฀million฀related฀ to฀the฀recognition฀of฀cumulative...

  • Page 98
    ...the฀liability฀ related฀to฀this฀...Luna฀Energy,฀L.L.C.฀ ("Luna"),฀in฀which฀we฀had฀a฀40%฀interest฀and฀that฀we฀ accounted฀for฀using฀the฀equity฀method฀of฀accounting.฀In฀ December฀2004...฀basis. 48 Baker฀Hughes฀Incorporated Current:฀ ...

  • Page 99
    ...2004฀ 2003฀ 2002 Statutory฀income฀ ฀ tax฀at฀35%฀฀ Effect฀of฀WesternGeco฀฀ ฀ operations฀ Effect฀of฀foreign฀฀ ฀ operations฀ Net฀tax฀charge฀related฀ ฀ to฀foreign฀losses฀ State฀income฀taxes net฀of฀U.S.฀tax฀benefit฀ IRS...฀reporting...

  • Page 100
    ...90.2฀million฀ for฀our฀share฀of฀a฀$300.7฀million฀restructuring฀charge฀related฀ to฀WesternGeco's฀impairment฀of฀assets,฀reductions฀in฀workforce,฀closing฀certain฀operations฀and฀reducing฀its฀marine฀seismic฀fleet. 50 Baker฀Hughes฀Incorporated

  • Page 101
    ...combined฀financial฀information฀for฀ the฀affiliates,฀in฀which฀we฀account฀for฀our฀interests฀using฀the฀ equity฀method฀of฀accounting,฀is฀as฀follows฀as฀of฀December฀31: ฀ 2004฀ 2003 Note฀9.฀Property Property฀is฀comprised฀of฀the฀following...

  • Page 102
    ...reporting฀units฀ as฀of฀January฀1,฀2002.฀Our฀reporting฀units฀were฀based฀on฀ our฀organizational฀and฀reporting฀structure.฀Corporate...฀in฀2004฀or฀2003฀at฀our฀reporting฀ units฀related฀to฀the฀annual฀impairment฀...52 Baker฀Hughes฀Incorporated

  • Page 103
    ...less฀than฀or฀equal฀to฀0.50,฀limit฀the฀amount฀ of฀subsidiary฀indebtedness...facility฀during฀the฀year฀ended฀December฀31,฀2004;฀however,฀ our฀ability฀to฀borrow฀under...฀certain฀ debt฀securities฀above฀and฀reported฀in฀long-term฀debt฀in฀the...

  • Page 104
    ...54 Baker฀Hughes฀Incorporated Pound฀Sterling,฀the฀Norwegian฀Krone,฀the฀Euro฀and฀the฀Brazilian฀Real.฀These฀contracts฀are฀designated฀and฀qualify฀as฀fair฀ value฀hedging฀instruments.฀Based฀on฀quoted฀market฀prices฀as฀ of฀December฀31,฀2004...

  • Page 105
    Note฀13.฀Segment฀and฀Related฀Information We฀operate฀through฀seven฀divisions฀-฀Baker฀Atlas,฀Baker฀ Hughes฀Drilling฀Fluids,฀Baker฀Oil฀Tools,฀Baker฀Petrolite,฀Centrilift,฀Hughes฀Christensen฀and฀INTEQ฀-฀that฀we฀have฀aggregated฀ into฀the...

  • Page 106
    ...country฀based฀on฀the฀location฀of฀the฀use฀of฀the฀products฀or฀ services฀for฀the฀years฀ended฀December฀31: ฀ 2004฀ 2003฀ 2002 United฀States฀ Canada฀฀ United฀Kingdom฀฀ Norway฀ Russia฀฀ China฀฀ Venezuela฀฀ Other฀countries฀฀ Total...

  • Page 107
    ...฀for฀issuance฀under฀the฀plan.฀Employees฀purchased฀0.8฀million฀shares฀in฀each฀of฀the฀three฀ years฀ending฀December฀31,฀2004. We฀have฀awarded฀restricted฀stock฀to฀directors฀and฀certain฀executive฀officers.฀The฀fair฀value฀of฀the...

  • Page 108
    ...employees฀primarily฀in฀the฀U.S.,฀ the฀U.K.฀and฀Germany.฀During฀2004...service... $฀ 173.4฀ $฀ 132.7฀ We฀report฀prepaid฀benefit฀cost฀in฀other฀assets฀...฀ ฀ ฀ $฀ 1.3฀ (34.0)฀ (75.7)฀ 0.5฀ 75.2 (32.7) 58฀฀฀฀฀Baker฀Hughes฀Incorporated

  • Page 109
    ...actuarial฀present฀value฀of฀pension฀benefits฀attributed฀to฀employee฀service฀to฀ date฀and฀present฀compensation฀levels.฀The...was฀$252.5฀million฀and฀$245.0฀million฀at฀December฀31,฀2004฀and฀2003,฀respectively. Information฀for฀the฀plans฀with฀...

  • Page 110
    ...฀portion฀reported฀in฀฀ ฀ accrued฀employee฀compensation฀฀ Long-term฀portion฀reported฀in฀฀ ฀ pensions฀and฀postretirement฀฀ ฀ benefit฀obligations฀ 60 Baker฀Hughes฀Incorporated (123.2)฀ ฀ (16.3)฀ ฀ Effect฀on฀total฀of฀service฀ ฀ and...

  • Page 111
    ...certain฀officers฀and฀ employees฀whose฀benefits฀under฀both฀the฀Thrift฀Plan฀and฀the฀ Pension฀Plan฀are฀limited฀by...interviews฀with,฀current฀ and฀former฀employees฀in฀connection฀with฀the฀investigations฀ regarding฀Nigeria,฀Angola฀and฀Kazakhstan...

  • Page 112
    ...฀against฀corporations฀and฀individuals฀in฀appropriate฀ circumstances฀including,฀but฀not฀limited฀to,฀injunctive฀relief,฀ disgorgement,฀fines,฀penalties฀and฀modifications฀to฀business฀ practices฀and฀compliance฀programs.฀During฀2004,฀such฀agencies...

  • Page 113
    ...normal฀course฀of฀business฀with฀customers,฀vendors฀and฀others,฀we฀have...2004.฀We฀also฀had฀commitments฀outstanding฀ for฀purchase฀obligations฀related...฀effect฀of฀accounting฀ change฀in...฀in฀Europe฀and฀with฀a฀fleet฀of฀ leased฀railcars฀and...

  • Page 114
    ...฀ Third฀Quarter฀ Fourth฀Quarter฀ Total฀Year 2004 ฀ Revenues฀ ฀ Gross฀profit(1)฀ ฀ Income...46 ฀ ฀ (2)฀ See฀Note฀4฀for฀reversal฀of฀restructuring฀charge฀and฀Note฀8฀for฀impairment฀of฀investment฀in฀affiliate. 64 Baker฀Hughes฀Incorporated

  • Page 115
    ...Plan฀Awards฀During฀2004,"฀"Pension฀Plan฀Table,"฀ "Employment,฀Change฀in฀Control,฀Severance฀and฀Indemnification฀Agreements,"฀"Compensation฀Committee฀Report,"฀ "Compensation฀Committee฀Interlocks฀and฀Insider฀Participation,"฀and฀"Corporate฀Performance...

  • Page 116
    ...and฀conditions฀of฀the฀option฀award฀agreements฀for฀ options฀issued...2004฀and฀approximately฀0.3฀million฀shares฀ remained฀available฀for฀future฀options. 1998฀Special฀Employee฀Stock฀Option฀Plan The฀Baker฀Hughes฀Incorporated฀1998฀Special฀Employee...

  • Page 117
    ...grant฀as฀awards฀other฀than฀options฀(the฀number฀of฀shares฀is฀ subject฀to฀adjustment฀for฀changes฀in฀our฀Common฀Stock). The฀2002฀Employee฀LTIP฀is฀the฀companion฀plan฀to฀the฀ Baker฀Hughes฀Incorporated฀2002฀Director฀&฀Officer฀LongTerm...

  • Page 118
    ...80,000฀shares฀of฀Company฀Common฀Stock฀(filed฀as฀Exhibit฀10.5฀to฀Quarterly฀Report฀of฀Baker฀Hughes฀Incorporated฀ on฀Form฀10-Q฀for฀the฀quarter฀ended฀September฀30,฀2004). 10.6+฀ Agreement฀regarding฀restricted฀stock฀award฀issued฀to฀James...

  • Page 119
    ...฀ended฀September฀30,฀2004). 10.17+฀ Form฀of฀Indemnification฀Agreement฀between฀Baker฀Hughes฀Incorporated฀and฀each฀of฀the฀directors฀and฀executive฀ officers฀(filed฀as฀Exhibit฀10.4฀to฀Annual฀Report฀of฀Baker฀Hughes฀Incorporated฀on฀Form...

  • Page 120
    ... Form฀of฀Baker฀Hughes฀Incorporated฀Stock฀Option฀Award฀Agreements,฀dated฀July฀24,฀2002,฀with฀Terms฀and฀฀ Conditions฀for฀employees฀and฀for฀directors฀and฀officers฀(filed฀as฀Exhibit฀10.46฀to฀Annual฀Report฀of฀Baker฀Hughes฀ Incorporated...

  • Page 121
    ...Exhibit฀10.32฀to฀Annual฀Report฀of฀Baker฀Hughes฀Incorporated฀on฀Form฀10-K฀for฀the฀year฀ended฀December฀31,฀2003). 10.59฀ Master฀Formation฀Agreement฀by฀and฀among฀the฀Company,฀Schlumberger฀Limited฀and฀certain฀wholly฀owned฀฀ subsidiaries...

  • Page 122
    ...report฀to฀be฀signed฀on฀its฀behalf฀by฀the฀undersigned,฀thereunto฀duly฀authorized. ฀ Date:฀February฀28,฀2005 BAKER฀HUGHES฀INCORPORATED฀ ฀/s/CHAD฀C.฀DEATON฀ Chad฀C.฀Deaton Chairman฀of฀the฀Board฀and฀Chief฀Executive฀Officer...said฀attorneys-...

  • Page 123
    ...฀Prior฀ Deductions(1)฀ Deductions ฀ ฀ Write-offs(2)฀ Charged฀to฀ Other฀ Accounts(3)฀ Balance฀at฀ End฀of฀ Period Year฀ended฀December฀31,฀2004:฀ ฀ Reserve฀for฀doubtful฀accounts฀receivable฀ ฀ Reserve฀for฀inventories Year฀ended฀December฀31...

  • Page 124
    ...฀Certification฀are฀available฀on฀our฀website; •฀ annually฀reviews฀compliance฀with฀our฀environmental฀policy.฀ The฀Baker฀Hughes฀Environmental฀Policy฀is฀available฀on฀ our฀website; •฀ prepares฀an฀annual฀report฀to฀stockholders฀which฀is...

  • Page 125
    ...฀should฀be฀re-nominated; •฀ annually฀reviews฀board฀compensation฀and฀compensation฀methods; •฀ reviews฀outside฀directorships฀in฀other฀companies฀by฀฀ Baker฀Hughes'฀senior฀officers; •฀ reviews฀and฀recommends฀directors'฀fees. ฀ Directors...

  • Page 126
    .../about/rights_statement.htm Environmental฀Policy www.bakerhughes.com/HSE/plan_policy.htm Biographies฀of฀Board฀Members www.bakerhughes.com/investor/about/bod.htm Biographies฀of฀Executive฀Officers www.bakerhughes.com/investor/about/management.htm Ownership฀Structure ฀ Investors...

  • Page 127
    ...฀Swiss฀Exchange Investor฀Relations฀Office Gary฀R.฀Flaharty Director,฀Investor฀Relations Baker฀Hughes฀Incorporated P.O.฀Box฀4740 Houston,฀Texas฀77210-4740 [email protected] Form฀10-K Additional฀copies฀of฀the company's฀Annual฀Report฀to the฀Securities฀and...

  • Page 128
    Baker฀Hughes฀Incorporated 3900฀Essex฀Lane฀ Houston,฀TX฀77027 P.O.฀Box฀4740฀ Houston,฀TX฀77210-4740 (713)฀439-8600 www.bakerhughes.com