just-auto.com

USA: SEC eyes transactions between Delphi and EDS

By just-auto.com editorial team | 1 October 2004

The Securities and Exchange Commission reportedly is investigating transactions between auto supplier Delphi and Electronic Data Systems, its long-time supplier of information technology services.

According to the Associated Press (AP), in an 8-K filing with the SEC on Wednesday, Delphi reportedly said the investigation centres around the accounting treatment of $US46 million in payments made and credits given by EDS to Delphi in 2000 and 2001, and $40.5 million in payments Delphi made to EDS for IT services in 2002 and 2003.

Delphi, the world's largest automotive supplier and a former General Motors division, reportedly said it received a subpoena from the SEC in July and a formal order of investigation from the federal regulatory agency in August, AP noted.

The SEC has since advised Troy-based Delphi that it is looking into the accounting treatment of payments Delphi received from other IT suppliers, the report added.

"The company is reviewing the accounting for these and other transactions, including contracts for information technology services and products from the same and other periods," Delphi said in the filing, according to the Associated Press. "There can be no assurance the (SEC) will not expand the scope of their review."

Delphi, which posted $28 billion in sales last year, reportedly said it was cooperating fully with the SEC.

"Until the staff's investigation and our review are complete, we are not able to predict the potential effect they will have on Delphi," the filing said.

A Delphi spokeswoman told AP the company would have no other comment.

Kevin Lightfoot, a spokesman for Plano, Texas-based EDS, told the Associated Press the company self-reported the matter to the SEC in an August 10-Q filing. "The transaction was not material to EDS and we're cooperating fully with the SEC," Lightfoot said.

Noting that EDS had $21.5 billion in sales in 2003, AP said the firm has been under investigation by the SEC for two years over an earnings shortfall and stock transactions. The agency has also asked EDS for information about the company's write-down this year of a multi-billion-dollar computer contract with the Navy.

Associated Press said Delphi on Thursday said it would lay off 120 workers at its Thermal and Interior plant in Vandalia, Ohio. A spokeswoman told the news agency the cuts stem from reduced demand for airbags and door panels produced at the plant. In the past seven years, Delphi's area work force has dropped to 8,700 from 15,000.