Baker Hughes 2004 Annual Report Download - page 38

Download and view the complete annual report

Please find page 38 of the 2004 Baker Hughes annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

AUDIT/ETHICS฀COMMITTEE฀REPORT
The฀Audit/Ethics฀Committee฀is฀comprised฀of฀five฀members,฀
each฀of฀whom฀is฀independent,฀as฀defined฀by฀the฀standards฀of฀
the฀NYSE,฀the฀rules฀of฀the฀SEC,฀and฀under฀the฀Company’s฀Pol-
icy฀for฀Director฀Independence฀(attached฀as฀Annex฀A฀to฀this฀
Proxy฀Statement).฀Under฀the฀charter฀of฀the฀Audit/Ethics฀Com-
mittee฀(attached฀as฀Annex฀B฀to฀this฀Proxy฀Statement),฀the฀
Audit/Ethics฀Committee฀assists฀the฀Board฀of฀Directors฀in฀over-
seeing฀matters฀relating฀to฀the฀accounting฀and฀reporting฀prac-
tices฀of฀the฀Company,฀the฀adequacy฀of฀the฀Company’s฀
disclosure฀controls฀and฀internal฀controls,฀the฀quality฀and฀integ-
rity฀of฀the฀quarterly฀and฀annual฀financial฀statements฀of฀the฀
Company,฀the฀performance฀of฀the฀Company’s฀internal฀audit฀
function฀and฀the฀review฀and฀pre-approval฀of฀the฀current฀year฀
audit฀and฀non-audit฀fees฀with฀the฀Company’s฀independent฀
auditor.฀The฀Audit/Ethics฀Committee฀also฀oversees฀the฀฀
Company’s฀policies฀with฀respect฀to฀risk฀assessment฀and฀risk฀
management฀and฀compliance฀programs฀relating฀to฀legal฀and฀฀
regulatory฀requirements.฀
During฀the฀year฀ended฀December฀31,฀2004,฀the฀Audit/Ethics฀
Committee฀held฀11฀meetings฀and฀otherwise฀met฀and฀commu-
nicated฀with฀management฀and฀with฀Deloitte฀&฀Touche฀LLP,฀the฀
Company’s฀Independent฀Auditor฀for฀2004.฀Deloitte฀&฀Touche฀
discussed฀with฀the฀Audit/Ethics฀Committee฀various฀matters฀
under฀applicable฀auditing฀standards,฀including฀information฀
regarding฀the฀scope฀and฀results฀of฀the฀audit฀and฀other฀matters฀
required฀to฀be฀discussed฀by฀the฀Statement฀on฀Auditing฀Stan-
dards฀No.฀61,฀as฀amended,฀“Communication฀with฀Audit฀Com-
mittees.”฀The฀Audit/Ethics฀Committee฀also฀discussed฀with฀
Deloitte฀&฀Touche฀its฀independence฀from฀the฀Company฀and฀
received฀a฀written฀statement฀from฀Deloitte฀&฀Touche฀concern-
ing฀independence฀as฀required฀by฀the฀Independence฀Standards฀
Board฀Standard฀No.฀1,฀“Independence฀Discussions฀with฀Audit฀
Committees.”฀The฀Audit/Ethics฀Committee฀also฀reviewed฀the฀
provision฀of฀services฀by฀Deloitte฀&฀Touche฀not฀related฀to฀the฀
audit฀of฀the฀Company’s฀financial฀statements฀and฀not฀related฀
to฀the฀review฀of฀the฀Company’s฀interim฀financial฀statements฀
as฀it฀pertains฀to฀the฀independence฀of฀Deloitte฀&฀Touche.฀
The฀Audit/Ethics฀Committee฀reviewed฀and฀discussed฀with฀
management฀the฀Company’s฀financial฀results฀prior฀to฀the฀
release฀of฀earnings.฀In฀addition,฀the฀Audit/Ethics฀Committee฀
reviewed฀and฀discussed฀with฀management,฀the฀Company’s฀
internal฀auditors฀and฀Deloitte฀&฀Touche฀the฀interim฀financial฀
information฀included฀in฀the฀March฀31,฀2004,฀June฀30,฀2004฀
$25
$50
$75
$100
$125
$150
$175
$200
$225
$250
S&P฀Oil฀and฀Gas฀Drilling฀and฀Equipment
S&P฀500
Baker฀Hughes
200420032002200120001999
Comparison฀of฀Five-Year฀Cumulative฀Total฀Return*฀
Baker฀Hughes฀Incorporated;฀S&P฀500฀Index฀and฀S&P฀500฀Oil฀and฀Gas฀Equipment฀and฀Services฀Index
฀ 1999฀ 2000฀ 2001฀ 2002฀ 2003฀ 2004
Baker฀Hughes฀ $฀ 100.00฀ $฀ 199.96฀ $฀ 177.88฀ $฀ 159.21฀ $฀ 161.40฀ $฀ 216.62
S&P฀500฀ ฀ 100.00฀ ฀ 90.89฀ ฀ 80.13฀ ฀ 62.45฀ ฀ 80.32฀ ฀ 89.02
S&P฀Oil฀and฀Gas฀Drilling฀
฀ and฀Equipment฀ ฀ 100.00฀ ฀ 133.93฀ ฀ 89.26฀ ฀ 79.03฀ ฀ 98.55฀ ฀ 129.87
*฀ Total฀return฀assumes฀reinvestment฀of฀dividends฀on฀a฀quarterly฀basis.
The฀comparison฀of฀total฀return฀on฀investment฀(change฀in฀year-end฀stock฀price฀plus฀reinvested฀dividends)฀assumes฀that฀$100฀was฀
invested฀on฀December฀31,฀1999฀in฀Baker฀Hughes฀Common฀Stock,฀the฀S&P฀500฀Index฀and฀the฀S&P฀500฀Oil฀and฀Gas฀Equipment฀and฀
Services฀Index.
22฀฀฀฀Baker฀Hughes฀Incorporated