May 23, 2007

Sanmina-SCI Corp. - There Is More To The Story

This was an article that I wasn’t going to write, but Sanmina was an unknown company too me, and being ranked 203rd on the Forbes 500 list, I wanted to do some back up research. When I started to dig a little, a story popped out.

From a
Mike Sunnucks article in the Phoenix Business Journal, Sanmina-SCI Corp. will be closing their plant in Phoenix this summer, releasing 602 staffers.

The San Jose Business Journal
printed a notice on May 15, that Sanmina would be closing a plant in Texas, putting 87 workers out of work. There was no indication of which plant or when this will happen but Sanmina has plants in Allen, Austin & Plano Texas.

My-Ly Nguyen wrote for the Gannett News Service that Sanmina laid off 100 workers at its Owego, N.Y. facility on Friday April 13. This was after a lay off of about 90 people a month earlier.

Both writers indicated that requests for information were cold shouldered.

The company has more than 40,000 workers and their world-wide operations are on this

But these lay off events have received little attention while the “street” seems to be more interested in an options back-dating scandal.

From a Huntsville Times
article by Gina Hannah written back in December:

“In a 370-page report filed with federal regulators, the company listed a number of problems in the way it recorded certain transactions during the past several years, including the backdating of stock options.”

“Sanmina-SCI said backdating practices will cost the company about $224 million.”
Other accounting problems listed in the report include:

“In fiscal 2004 and 2005, outstanding intercompany transactions between Sanmina-SCI's U.S. holdings and foreign divisions were not recorded as taxable income as required by federal law. The adjustment increased the company's tax liability to $27.4 million.”

“Sanmina-SCI said it had overstated goodwill, or intangible assets, by approximately $28.8 million as a result of understating the value of the stock awards exchanged in connection with its acquisition of SCI Systems in 2001.”

“The company said a fixed-asset reserve account was overstated by $27.4 million in 2001.”
That adds up to more than $300 million in accounting boo-boos. Not to mention the shareholder lawsuits filed against the company and a handful of execs.

In March CALPERS, the huge pension fund run for government employees in California, listed Sanmina as one of 11 companies in desperate need of better corporate governance.

More troubles for Sanmina. From a May 4 San Jose Business Journal article:

“U.S. Internal Revenue Service and the Labor Department have joined the organizations looking into the company's stock-option granting procedures.”
Other agencies have shown an interest:

“Sanmina-SCI had received informal requests for documents and other information from the SEC and a grand jury subpoena from the U.S. Attorney.”
“The company also said it is a party "to certain legal proceedings that have arisen in the ordinary course of our business.”
Maybe ordinary to their business.


Anonymous said...

Sanmina-SCI is now closing their Fountain, Colorado plant by December 31. Their plant in Rapid City, South Dakota laid off 40 workers in June and another 100 in August. This company will be one of those legends for the text books on how not to manage a business.

Anonymous said...

anonymous #2

What a surprise. I worked at this company a few years ago, after I had moved from another state. I knew something was wrong with this company after being hired through a staffing company and (being paid by the hour)then being told that I would not be paid over-time pay even though I was still working for the staffing company. Then they put everyone on a mandatory 7 day a week schedule. This is never done anywhere else except in South Dakota (because it is such a poor area). Secondly, they hire everyone telling them that after a certain period of time, they will be hired permanently. Of course, they never hire anyone permanently. What a sweat shop!

Anonymous said...

I worked for SCI for 16 years with perfect attendance and excellent reviews when it was bought out by Sanmina they layed off most of supervisors because they could. The use of temps in the workforce is disgrace, it allows the companys to treat workers any way that they want without being held accountable, it should be a law that anyone working thru a temp service has to be hired permanent after 90day.

Anonymous said...

i am glad im not the only one that went through this nightmare at sanmina. they hired me through a temp agency with the promise of being switched to a permanent status after a certain period!