Tech Giant Dismisses Longtime Auditor

The relationship between Applied Materials and PricewaterhouseCoopers had lasted a third of a century.
Stephen TaubJune 22, 2004

The audit committee of the board of directors of Applied Materials Inc. has dismissed PricewaterhouseCoopers LLP as its auditor, ending a 33-year relationship, and hired KPMG LLP.

About three months ago, according to Reuters, Applied Materials and PwC were engaged in a dispute over the auditor’s independence. In its most recent fiscal year, the company shelled out more than $2.3 million in fees to PwC, including about $960,000 for mostly tax-related services. According to the company’s proxy, its audit committee “concluded that the provision of the nonaudit services is compatible with maintaining the independence of PricewaterhouseCoopers LLP.”

Earlier this year, pension fund Calpers withheld its votes for four nominees to the company’s board because they were members of the audit committee that authorized PwC to perform nonaudit services.

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Responding to Calpers in a government filing on March 19, Applied Materials stated that it “wholeheartedly agrees that it is important to maintain the independence and objectivity of outside auditors.” The company added that PwC’s reports for the past two fiscal years contained no adverse opinion or disclaimer of opinion, that they were not qualified or modified, and that there were no disagreements with PwC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.

Jeff Lettes, a spokesman for Applied Materials, told Reuters that the board decided to dismiss PricewaterhouseCoopers primarily for factors other than shareholder pressure, adding, “of course we always listen to the perspective of our investors.”