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REPORT฀OF฀INDEPENDENT฀REGISTERED฀PUBLIC฀ACCOUNTING฀FIRM
To฀the฀Board฀of฀Directors฀and฀Stockholders฀of
Baker฀Hughes฀Incorporated
Houston,฀Texas
We฀have฀audited฀the฀accompanying฀consolidated฀balance฀sheets฀of฀Baker฀Hughes฀Incorporated฀and฀subsidiaries฀(the฀“Com-
pany”)฀as฀of฀December฀31,฀2004฀and฀2003,฀and฀the฀related฀consolidated฀statements฀of฀operations,฀stockholders’฀equity,฀and฀cash฀
flows฀for฀each฀of฀the฀three฀years฀in฀the฀period฀ended฀December฀31,฀2004.฀Our฀audits฀also฀included฀the฀financial฀statement฀schedule฀
II,฀valuation฀and฀qualifying฀accounts.฀These฀financial฀statements฀and฀financial฀statement฀schedule฀are฀the฀responsibility฀of฀the฀Com-
pany’s฀management.฀Our฀responsibility฀is฀to฀express฀an฀opinion฀on฀these฀financial฀statements฀based฀on฀our฀audits.
We฀conducted฀our฀audits฀in฀accordance฀with฀the฀standards฀of฀the฀Public฀Company฀Accounting฀Oversight฀Board฀(United฀States).฀
Those฀standards฀require฀that฀we฀plan฀and฀perform฀the฀audit฀to฀obtain฀reasonable฀assurance฀about฀whether฀the฀financial฀statements฀
are฀free฀of฀material฀misstatement.฀An฀audit฀includes฀examining,฀on฀a฀test฀basis,฀evidence฀supporting฀the฀amounts฀and฀disclosures฀in฀
the฀financial฀statements.฀An฀audit฀also฀includes฀assessing฀the฀accounting฀principles฀used฀and฀significant฀estimates฀made฀by฀manage-
ment,฀as฀well฀as฀evaluating฀the฀overall฀financial฀statement฀presentation.฀We฀believe฀that฀our฀audits฀provide฀a฀reasonable฀basis฀for฀
our฀opinion.
In฀our฀opinion,฀such฀consolidated฀financial฀statements฀present฀fairly,฀in฀all฀material฀respects,฀the฀financial฀position฀of฀Baker฀
Hughes฀Incorporated฀and฀subsidiaries฀at฀December฀31,฀2004฀and฀2003,฀and฀the฀results฀of฀their฀operations฀and฀their฀cash฀flows฀for฀
each฀of฀the฀three฀years฀in฀the฀period฀ended฀December฀31,฀2004,฀in฀conformity฀with฀accounting฀principles฀generally฀accepted฀in฀the฀
United฀States฀of฀America.฀Also,฀in฀our฀opinion,฀such฀financial฀statement฀schedule,฀when฀considered฀in฀relation฀to฀the฀basic฀consoli-
dated฀financial฀statements฀taken฀as฀a฀whole,฀presents฀fairly,฀in฀all฀material฀respects,฀the฀information฀set฀forth฀therein.
As฀described฀in฀Note฀1฀to฀the฀consolidated฀financial฀statements:฀effective฀as฀of฀January฀1,฀2003,฀the฀Company฀adopted฀State-
ment฀of฀Financial฀Accounting฀Standards฀No.฀143,฀which฀established฀new฀accounting฀and฀reporting฀standards฀for฀asset฀retirement฀
obligations;฀and฀effective฀as฀of฀January฀1,฀2002,฀the฀Company฀adopted฀Statement฀of฀Financial฀Accounting฀Standards฀No.฀142,฀which฀
established฀new฀accounting฀and฀reporting฀standards฀for฀the฀recording,฀amortization฀and฀impairment฀of฀goodwill฀and฀other฀intangibles.
We฀have฀also฀audited,฀in฀accordance฀with฀the฀standards฀of฀the฀Public฀Company฀Accounting฀Oversight฀Board฀(United฀States),฀the฀
effectiveness฀of฀the฀Company’s฀internal฀control฀over฀financial฀reporting฀as฀of฀December฀31,฀2004,฀based฀on฀the฀criteria฀established฀
in฀Internal฀Control฀–฀Integrated฀Framework฀issued฀by฀the฀Committee฀of฀Sponsoring฀Organizations฀of฀the฀Treadway฀Commission฀and฀
our฀report฀dated฀February฀24,฀2005฀expressed฀an฀unqualified฀opinion฀on฀management’s฀assessment฀of฀the฀effectiveness฀of฀the฀Com-
pany’s฀internal฀control฀over฀financial฀reporting฀and฀an฀unqualified฀opinion฀on฀the฀effectiveness฀of฀the฀Company’s฀internal฀control฀
over฀financial฀reporting.
Houston,฀Texas
February฀24,฀2005
38฀฀฀฀฀Baker฀Hughes฀Incorporated