Baker Hughes 2004 Annual Report Download - page 39

and฀September฀30,฀2004฀Form฀10-Qs฀prior฀to฀their฀being฀filed฀
with฀the฀SEC.฀The฀Audit/Ethics฀Committee฀also฀reviewed฀and฀
discussed฀the฀Company’s฀audited฀financial฀statements฀for฀the฀
year฀ended฀December฀31,฀2004฀with฀management,฀the฀Com-
pany’s฀internal฀auditors฀and฀Deloitte฀&฀Touche.฀Deloitte฀&฀Tou-
che฀informed฀the฀Audit/Ethics฀Committee฀that฀the฀Company’s฀
audited฀financial฀statements฀are฀presented฀fairly฀in฀conformity฀
with฀generally฀accepted฀accounting฀principles.฀The฀Audit/Ethics฀
Committee฀also฀monitored฀and฀reviewed฀the฀Company’s฀
implementation฀of฀procedures฀and฀policies฀relating฀to฀the฀
requirements฀of฀Section฀404฀of฀SOX฀and฀related฀regulations.
Based฀on฀the฀review฀and฀discussions฀referred฀to฀above,฀
and฀such฀other฀matters฀deemed฀relevant฀and฀appropriate฀
by฀the฀Audit/Ethics฀Committee,฀the฀Audit/Ethics฀Committee฀
recommended฀to฀the฀Board฀of฀Directors,฀and฀the฀Board฀has฀
approved,฀that฀the฀financial฀statements฀be฀included฀in฀the฀
Company’s฀Annual฀Report฀on฀Form฀10-K฀for฀the฀year฀ended฀
December฀31,฀2004.
James฀F.฀McCall฀(Chairman)
Clarence฀P.฀Cazalot,฀Jr.
Anthony฀G.฀Fernandes
James฀A.฀Lash
J.฀Larry฀Nichols
PROPOSAL฀NO.฀2฀
RATIFICATION฀OF฀INDEPENDENT฀AUDITOR
The฀Audit/Ethics฀Committee฀has฀selected฀the฀firm฀of฀
Deloitte฀&฀Touche฀LLP฀as฀our฀Independent฀Auditor฀to฀audit฀the฀
Company’s฀books฀and฀accounts฀for฀the฀year฀ending฀Decem-
ber฀31,฀2005.฀Deloitte฀&฀Touche฀has฀served฀as฀our฀Indepen-
dent฀Auditor฀for฀fiscal฀year฀2004.฀While฀the฀Audit/Ethics฀
Committee฀is฀responsible฀for฀the฀appointment,฀compensation,฀
retention,฀termination฀and฀oversight฀of฀the฀independent฀audi-
tor,฀we฀are฀requesting,฀as฀a฀matter฀of฀good฀corporate฀gover-
nance,฀that฀the฀stockholders฀ratify฀the฀appointment฀of฀Deloitte฀
&฀Touche฀as฀our฀principal฀Independent฀Auditor.฀If฀the฀stock-
holders฀fail฀to฀ratify฀the฀selection,฀the฀Audit/Ethics฀Committee฀
will฀reconsider฀whether฀to฀retain฀Deloitte฀&฀Touche฀and฀may฀
retain฀that฀firm฀or฀another฀without฀re-submitting฀the฀matter฀
to฀our฀stockholders.฀Even฀if฀the฀appointment฀is฀ratified,฀the฀
Audit/Ethics฀Committee฀may,฀in฀its฀discretion,฀direct฀the฀
appointment฀of฀a฀different฀independent฀auditor฀at฀anytime฀
during฀the฀year฀if฀it฀determines฀that฀such฀change฀would฀be฀
in฀the฀Company’s฀best฀interests฀and฀in฀the฀best฀interests฀of฀
our฀stockholders.
Deloitte฀&฀Touche’s฀representatives฀will฀be฀present฀at฀the฀
Annual฀Meeting฀and฀will฀have฀an฀opportunity฀to฀make฀a฀state-
ment,฀if฀they฀so฀desire,฀as฀well฀as฀to฀respond฀to฀appropriate฀
questions฀asked฀by฀our฀stockholders.
Recommendation฀of฀the฀Board฀of฀Directors
Your฀Board฀of฀Directors฀recommends฀a฀vote฀FOR฀ratification฀
of฀the฀selection฀of฀Deloitte฀&฀Touche฀LLP฀as฀the฀Company’s฀
Independent฀Auditor฀for฀2005.
FEES฀PAID฀TO฀DELOITTE฀&฀TOUCHE฀LLP
In฀2004฀and฀2003,฀Deloitte฀&฀Touche฀LLP,฀the฀member฀
firms฀of฀Deloitte฀Touche฀Tohmatsu฀and฀their฀respective฀affili-
ates฀(collectively,฀“Deloitte฀Entities”)฀billed฀the฀Company฀and฀
its฀subsidiaries฀for฀the฀aggregate฀fees฀set฀forth฀in฀the฀table฀
below.฀These฀fees฀include฀all฀fees฀paid฀by฀the฀Company฀for฀฀
(i)฀professional฀services฀rendered฀for฀the฀audit฀of฀the฀Compa-
ny’s฀annual฀financial฀statements฀and฀review฀of฀quarterly฀finan-
cial฀statements,฀audit฀services฀related฀to฀Management’s฀Report฀
on฀Internal฀Control฀over฀Financial฀Reporting฀and฀audit฀services฀
related฀to฀the฀effectiveness฀of฀the฀Company’s฀internal฀control฀
over฀financial฀reporting,฀(ii)฀assurance฀and฀related฀services฀that฀
are฀reasonably฀related฀to฀the฀performance฀of฀the฀audit฀or฀
review฀of฀the฀Company’s฀financial฀statements,฀(iii)฀professional฀
services฀rendered฀for฀tax฀compliance,฀tax฀advice,฀and฀tax฀plan-
ning฀and฀(iv)฀products฀and฀services฀provided฀by฀Deloitte฀Enti-
ties.฀In฀2003,฀the฀Company฀also฀purchased฀software฀and฀
hardware฀through฀Deloitte฀Consulting,฀one฀of฀the฀Deloitte฀
Entities.฀The฀aggregate฀amount฀of฀those฀purchases฀was฀
approximately฀$4.0฀million฀for฀2003,฀of฀which฀substantially฀all฀
was฀subject฀to฀the฀Company’s฀competitive฀bid฀process.฀No฀pur-
chases฀of฀this฀nature฀were฀made฀during฀2004.฀
฀ Fees฀Paid฀in฀฀ Fees฀Paid฀in฀
(in฀millions)฀ Fiscal฀Year฀2004฀ Fiscal฀Year฀2003
Audit฀fees฀ $฀10.6(1)฀ $฀ 3.6฀
Audit-related฀fees฀ ฀ 0.2฀ ฀ 0.2฀
Tax฀fees฀ ฀ 1.1฀ ฀ 1.1฀
All฀other฀fees฀ ฀ 0.0฀ ฀ 0.0฀
฀ Total฀ ฀$฀11.9฀ $฀ 4.9
(1)฀Includes฀approximately฀$4.2฀million฀related฀to฀the฀audit฀of฀the฀Company’s฀
annual฀financial฀statements฀and฀review฀of฀quarterly฀financial฀statements฀and฀
approximately฀$6.4฀million฀related฀to฀the฀audit฀of฀Management’s฀Report฀on฀
Internal฀Controls฀as฀required฀by฀Section฀404฀of฀SOX฀and฀audit฀services฀related฀
to฀the฀effectiveness฀of฀the฀Company’s฀internal฀control฀over฀financial฀reporting.
Audit-related฀fees฀paid฀to฀Deloitte฀Entities฀for฀both฀฀
2004฀and฀2003฀relate฀primarily฀to฀assistance฀with฀regulatory฀
filings฀and฀related฀matters,฀non-audit฀assistance฀with฀an฀inter-
nal฀control฀assessment฀program,฀non-audit฀work฀related฀to฀the฀
implementation฀of฀Section฀404฀of฀SOX,฀training฀services฀and฀
miscellaneous฀other฀minor฀services.
Tax฀fees฀paid฀to฀Deloitte฀Entities฀are฀primarily฀for฀the฀prep-
aration฀of฀income,฀payroll,฀value฀added฀and฀various฀other฀mis-
cellaneous฀tax฀returns฀in฀31฀of฀the฀more฀than฀90฀countries฀
where฀the฀Company฀operates.฀The฀Company฀also฀incurs฀local฀
country฀tax฀advisory฀services฀in฀these฀countries.฀Examples฀of฀
these฀kinds฀of฀services฀are฀assistance฀with฀audits฀by฀the฀local฀
country฀tax฀authorities,฀acquisition฀and฀disposition฀advice,฀con-
sultation฀regarding฀changes฀in฀legislation฀or฀rulings฀and฀advice฀
on฀the฀tax฀effect฀of฀other฀structuring฀and฀operational฀matters.
Proxy฀Statement฀฀฀฀฀23