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